Category Archives: Business and Economy

Is Unnamed Partner on Wind Project Driving This New Dominion Regulation Rewrite?

The late Lt. Gov. Henry Howell (D) and Virginia’s most famous campaign slogan.

By Steve Haner

Without fanfare and without awakening the drowsy Capitol press corps, Dominion Energy Virginia dropped in legislation last week to set up a partnership on its most massive capital investment, the Coastal Virginia Offshore Wind project.

Just who that partner might be, what if any benefits that provides to Dominion’s 2.6 million Virginia customers, or whether it instead adds cost and risk for them, remains unexplained. The bill does describe the equity investor as “non-controlling,” leaving the utility in charge.

Suddenly, many elements of the company’s other significant bill for 2023 make more sense. The most recent iteration is a pending substitute. In this other, wind-only bill, sponsored by Senator Lynwood Lewis, D-Accomac, the State Corporation Commission is instructed to disregard the capital structure of the partner, its debt to equity ratio, when determining the price to consumers.

That ratio is usually a key element when the regulators are deciding how much a utility can charge for a project, because only equity is allowed to earn profit.  In the longer bill, which has been previously discussed, Dominion is also asking the legislature to mandate how the SCC accounts for the debt and equity in its rate calculation.

The unnamed partner, perhaps already known to Dominion, may also have an interest in the debate over how a future SCC calculates the utility’s allowed return on that equity. It is equity this partner will be contributing, after all.  Virginia is the only state that sets utility return on equity by making comparisons to so-called “peer” utilities. The more complex bill changes the rules on that, too, and further limits SCC discretion. Continue reading

The Box and the Snowball

by Joe Fitzgerald

There’s a box, and there’s a snowball.

The box is the support of the Bluestone Town Center. It is a well-constructed but beautifully decorated box, built on strong buzzwords. Affordable Housing, and Climate Change, and Dense Development are the shiny wrapping on this gift. The snowball of opposition rolling toward City Hall grows each time a post on social media begins, “I didn’t realize ….” Didn’t realize how big it is, how much traffic, how much impact on the schools, how far from the center of town it is.

The box is being built purposefully. Proponents on the Planning Commission and City Council who have not yet heard the presentation of pros and cons are publicly and privately adding items to the box. Their box is a container for their support of the project, and they will only add those things that bolster their case.

The snowball is built on surprise. With local journalism struggling, people find out in bits and pieces how large the thing is, how many cars and students it will add, how badly proponents have considered flooding, runoff, and blasting.

The box includes support that’s at best half-hearted from city staff. The recommendation from the Community Development staff reads less like approval and more like, “Well, we guess it’s OK.” The City Attorney outlines why the offers to mitigate school impact are illegal under current law and an administrative nightmare if the city changes the law to accommodate them.

The Harrisonburg Redevelopment and Housing Authority (HRHA) and the tax specialists will open their box at the Planning Commission meeting Tuesday, where they will explain how this is the greatest thing since the golf course. The snowball of citizens will attempt to deliver death by a thousand cuts. They don’t have the staff, they don’t have the legal help, and they don’t have elected and appointed officials who’ve already made up their minds. They only have the spirit of those who have throughout our history stood up and told their government it’s wrong.

Opponents have already been described in whispers as NIMBYs, or “not in my back yard.” I live two miles away, so it’s hardly in my back yard. But what if it were? Rezoning requests like this one are required to inform neighbors. The whole idea of zoning is to regulate what is built next to what. Homeowners’ defense of their surroundings should not be subordinate to what a planning commission or HRHA chair thinks is best for them and their neighbors.

As this proposal goes forward, I hope elected and appointed officials will remember that they serve the entire city and not just the preferences of a vocal political minority. For the people we elect and the people they appoint, the whole city is supposed to be their back yard.

Joe Fitzgerald is a former mayor of Harrisonburg. This column is republished with permission from his blog, Still Not Sleeping.

Consumers Be Wary When Energy Elephants Dance

By Steve Haner

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

The Virginia House of Delegates is expected to vote this week to exempt certain Virginia manufacturers, which ones to be determined later, from the coming wave of energy costs created by Virginia’s rapid transition to unreliable forms of power generation. Continue reading

Virginia Democrats’ Rent Control Bills Would Make Housing Scarcer

by Hans Bader

In Virginia’s legislature, rent-control legislation has been introduced by five Democratic delegates and a Democratic state senator. Economists oppose rent control because it makes it more difficult for people to find decent housing in the long run. In a 1992 poll, 93% of those surveyed said rent control reduces the quantity and quality of housing available.

But Democrat-run Loudoun County is now asking the Virginia legislature for the power to impose rent control. DC News Now reported in December that “New policies could soon be introduced in Richmond at the request of Loudoun County. One would place a limit on rent increases.”

This is surprising, because even left-leaning economists mostly think rent control is stupid, as expressed by Swedish economics professor Assar Lindbeck. He said, “Rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”

In 1989, Vietnam’s socialist leaders reluctantly admitted that their policy of rent control had destroyed the housing stock of Vietnam’s capital city, which had been sturdy enough to survive years of American bombing during the Vietnam War. Vietnam’s foreign minister said, “The Americans couldn’t destroy Hanoi, but we have destroyed our city by very low rents. We realized it was stupid and that we must change policy.”

Yet State Senator Jennifer Boysko, who represents Virginia’s Loudoun County, has introduced SB 1278, a rent-control bill. It would allow cities and counties to adopt rent control ordinances, under which rent increases would be limited to inflation or less. Her legislation states that such ordinances “shall prohibit any increase in the rent by such landlord of more than” the “percentage increase in the Consumer Price Index,” and “may allow rent increases … by an amount not to exceed” that inflation rate. The same bill has been introduced in the Virginia House of Delegates by Democratic socialist Nadarius Clark and four other Democrats, as HB 1532. Continue reading

Projected $312 Billion Cost of Lost Earnings of Virginia K-12 Students due to Pandemic School Closures

Courtesy Eric Hanushek

by James C. Sherlock

Over $312 billion in present value.

That is the estimate published by Stanford’s Eric A. Hanushek of expected economic losses attributable to Virginia’s pandemic school closures.

Virginia students in the COVID cohort can expect on average 5.5 percent lower lifetime earnings.

History indicates that the economic losses will be permanent unless the schools get better. Just returning schools to their pre-pandemic performance levels will not erase the lost learning.

Recovering from the pandemic requires swift and decisive improvements to the schools.

That number is an estimate, but a scientific one. Dr. Hanushek has better credentials with which to make that estimate than perhaps any other economist in the world.

For perspective, the $312 billion present value of projected losses to the Virginia economy due to COVID school shutdowns represents about seven years of state revenue realized from Virginia sources in the 2021 and 2022 biennium.

Even the money pales by comparison to the developmental and emotional damage done to the children.

But feel better.

His estimate of similar losses to California exceeds $1.2 trillion. Continue reading

Who Kept Your Grocery Taxes High This Holiday Season?

by Scott Dreyer

Turkey, ham, chuck roast, pork loin, cornish hens, cranberries, potatoes, sweet potatoes, green beans, rolls, corn, cheese, flour, sugar, egg nog, hot chocolate mix.

Quick! What do these items have in common?

For one thing, they are popular food items, most not only year-long, but especially at the holiday season. Plus, if you are a Virginian, they are items you have been paying extra taxes on these past six months.

Doesn’t everyone pay a tax on groceries?

No. Five states have no grocery tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. A tax on groceries is called a regressive tax. According to investopedia.com, a regressive tax is “a tax applied uniformly, taking a larger percentage of income from low-income earners than from middle- and high-income earners …. With a regressive tax, the tax burden decreases as income rises.” In other words, imagine a low-income family with several children. Their grocery bill eats up (pardon the pun) a huge chunk of their total budget. In contrast, imagine you’re Sen. Mark Warner (D). With a net worth north of $300 million, and as the richest member of the Senate, his grocery bill relative to his total fortune is infinitesimal.

So what about Virginia?

When campaigning for governor, then-candidate Glenn Youngkin (R) pledged to end the state’s tax on groceries and some personal hygiene products (diapers, tampons, etc.). At that time, the state grocery was was 1.5%, and Richmond let local governments charge an additional 1% tax. So, when one spent $100 on groceries and some personal hygiene products, the tax was $2.50 total.

Working to keep his campaign promises, Gov. Youngkin urged the General Assembly to put the tax cuts into law. Amazingly, in our hyper-partisan environment, in February 2022 the House of Delegates voted 80-20 on House Bill (HB) 90, to end both the state and local grocery tax. In the state Senate, however, Republicans also tried to completely kill the grocery tax, but Democrats stopped it.  As a compromise, the state dropped its 1.5% tax but let local governments continue to charge a 1% tax if they wished. Continue reading

The Big Christmas Chill Was a Wakeup Call

by Bill O’Keefe

As temperatures dropped dramatically over the Christmas weekend, Dominion Energy’s advice to its customers — those who still had power — was to turn down their thermostats. Virginia was not alone. PJM, the regional grid management organization covering 13 states and the District of Columbia, made the same request because its gas plants couldn’t get enough fuel to meet the demand for home heating.

According to The Wall Street Journal, rolling blackouts were averted because PJM ordered some businesses to curtail power while switching some generators to oil. The large regions served by both the Tennessee Valley Authority and Duke Energy experienced rolling blackouts. And for the second year in a row, Texas faced a grid problem as wind power plunged and demand doubled.

The Wall Street Journal also noted that, “While there wasn’t a single cause for the power shortages, government policies to boost renewable energy snowballed and created problems that cascaded through the grid. There have been warnings about grid vulnerability for years but this Christmas proves that these warnings have not been taken seriously. The climate lobby blames climate change and greedy energy companies for this year’s problems but there have been colder Christmases — 1980 and 1983 for example. And, there have been colder Decembers that were survived without a grid breakdown or near breakdown.

The problems faced by utilities should be a warning and a reason for reassessment. Will Dominion heed that warning or will it continue on its present course? How will it prevent more serious problems as the demand for electrical power continues to increase and electric heat pumps are promoted and subsidized as responsible replacements for gas- and oil-fired furnaces?

That Dominion had to urge its customers to turn down their thermostats indicates that it did not have sufficient surge capacity to meet the demand caused by low temperatures. We need to know why. It could be the result of the 2019 decision to shutter all of its coal-fired capacity as part of its Net-Zero 2050 commitment and the General Assembly mandate to do so by 2024.
Continue reading

New Youngkin Tax Cuts Total $7 Billion By 2028

Governor Youngkin’s major tax proposals and how much they save taxpayers. Source: Secretary of Finance. Click for larger view.

by Steve Haner

The set of Virginia tax changes Governor Glenn Youngkin (R) has baked into his proposed 2023 budget amendments is far more extensive and involves substantially more tax relief than the descriptions he offered in his December 15 presentation. Continue reading

Richmond’s Next Chapter

by Jon Baliles

The Times-Dispatch Editorial Board printed a piece this week entitled “The city’s Lost Cause statues are all gone. So what now?” While it recaps the events and protests of 2020 and the fact that all of the former Confederate statues have been removed, it offers a bit more foresight by looking at what will be required of our City and our leaders in the future.

The piece points out that the removal of the A.P. Hill statue was characterized by Mayor Stoney as an opportunity to “start writing a new chapter for the city” and to make the accident-prone intersection more safe. “That’s the blocking and tackling of running a government,” Stoney said. The editorial, however, goes a little deeper than the Mayor:

Charting a new chapter for Richmond, however, requires something more than “blocking and tackling.” In the summer of 2020, a broad coalition of Richmond citizens and public officials — including Stoney — embraced a newfound commitment to breaking down systemic racism and creating a more inclusive, equitable Richmond. In the winter of 2022, we still have little to show for it.

It runs down the list of things that you constantly hear Stoney talking about but providing very little in the way of policy solutions that are implemented and working.

City schools are struggling with a leadership crisis, a teacher shortage and a student population that’s been devastated by pandemic-induced learning challenges. The affordable housing crisis, especially for the poorest Richmonders, has only grown worse. Evictions and homelessness are spiking, with no comprehensive plan to address it. The Richmond Police Department is grappling with more than 150 officer vacancies as gun violence surges — disproportionately impacting Black families, of course — as it begins the search to replace yet another departed police chief.

It talks about the housing crisis, and that apartments are going up with lightning speed in Manchester and Scott’s Addition and (soon) in the Diamond District, while “South Side and the East End are left to fend for themselves. Redevelopment of public housing complexes remain stuck at the starting gate. The new Richmond takes priority over the old.” It does point out some of the positive news we have seen, like poverty dropping to 18% (lowest in two decades) and our “urban cool” is on the rebound as the pandemic years are more in the rearview mirror.

But the thing that struck me the most about this piece is that it is really the first marker of issues that are and will be on the table and need to be addressed in 2024 when the City elects a new Mayor and City Council (in which, I will not be a participant). We have heard lots of talk and seen lots of tweets over the years from the Mayor and others about all they are doing for the City. But we can no longer afford trading real political solutions (including listening, compromise, and common ground) for self-promotion on social media just to rack up more clicks, likes and retweets and counting that as a measure of success.

As Denzel Washington once said, “Just because you are doing a lot more, doesn’t mean you are getting a lot more done. Don’t confuse movement with progress.” Continue reading

Virginia Agrees To Compensate Fishing Industry For Damage From Offshore Wind

by Steve Haner

Nine states, including Virginia, have agreed to establish a major compensation fund to pay their private commercial and recreational fishing companies for damages caused by offshore wind turbines.  

Three guesses where the money comes from. The announcement, made December 12, hints at it coming from project developers, but in Virginia of course that is a monopoly utility guaranteed by law to collect all costs from its customers. Dominion Energy Virginia’s planned 176-turbine Coastal Virginia Offshore Wind (CVOW) just got more expensive. In other cases and other states, also expect the bill to end up with energy consumers or taxpayers. Continue reading

Data Dump

by Bob Rayner

Modern marketers understand the value of data — no matter how trivial. That’s how we know, or at least can consider the possibility, that Virginia is the 10th sleepiest state in the union, tied with Pennsylvania, a numbers nugget delivered by MatressInsider.com, the bedding retailer. The company gathered county health data from around the country to see how many people sleep less than 7 hours per night. The sleepiest state: Hawaii, where 43.2% of adults report less than 7 hours of shut-eye. That’s no surprise, with so many waves to catch. The No. 2 and 3 spots are a surprise: West Virginia and Kentucky, respectively. Maybe it’s all those coal miners worrying about what new horrors the Biden Administration is dreaming up for them. Virginia clocks in at 38.6%. No breakdown by region, but we suggest the folks in Northern Virginia stay in bed a little longer. No need to rush into work, folks. America’s best sleepers, by the way, live in Minnesota, where just 29% don’t sleep enough. Plenty of warm blankets up there.

Insomnia can make you hungry. And according to Pricelisto, a web site that tracks pricing, Virginians are most likely to seek fast food at Chick-Fil-a. The finding is sure to horrify in certain narrow precincts, but there’s no denying good taste and superior service. It’s equally unsurprising that Five Guys ranks No. 3 among Virginia’s favorite fast-food spots. The stunner is No. 2: Hardees. To paraphrase a certain former president, the ‘ 70s are calling and they want their burgers back.

Whiplash on Virginia’s Economy

by Dick Hall-Sizemore

“Our beloved Commonwealth is in a ditch.” Glenn Youngkin, May 7, 2021.also see here.

“The commonwealth has never been in a stronger financial condition.” Glenn Youngkin, Nov. 21, 2022

JLARC Agrees: Index Virginia Taxes to Inflation

by Barbara Hollingsworth

Inflation is eroding the value of each dollar earned by Virginians, making it harder for them to afford decent housing, put food on the table and educate their children. But what many Virginians don’t know is that they have also been paying more in state income taxes while their real income has declined because the commonwealth’s tax code is not indexed to inflation.

A new report by Virginia’s Joint Legislative Audit and Review Commission (JLARC) points out that state income taxes in the commonwealth “have far outpaced median income, because income brackets have not been changed since 1990.”

Thanks to inflation, state income taxes owed by a median filer have increased 173% since 1990, while that same taxpayer’s actual income increased only 108%. Continue reading

Opioid Epidemic Costs Virginians $3.5 Billion a Year

Over and above the lives it has destroyed, the opioid epidemic cost Virginia’s economy about $3.5 billion in 2020, according to data published by the Virginia Department of Health. The major costs calculated include lost labor, health care and crime.

Mapping the costs by locality, the database shows per-capita costs ranging from $132 in Falls Church and $152 in Highland County to $971 in Petersburg and $954 in Richmond.  One trend that stands out is how the highest cost of crime is concentrated in the Richmond region and counties to the southwest, and to a lesser degree in the state’s Tidewater region. The maps below show the breakdown by locality and cost category. –JAB Continue reading

Virginia as Tech Worker Paradise?

There is good news and bad news in a recent ranking of the best places in the U.S. “to work in tech” by Zurich, Switzerland-based SmallPDF, a company that converts PDF files to Word files.

The good news is that Virginia ranks at the top of the list. From the press release:

The research found “that Virginia is the best state to work in tech right now due to high average wages in the Computer and Mathematical Occupations field with $110,510 a year, 58.44 employed in the field per 1,000 jobs, and the highest current tech vacancies with 128.97 openings per 100,000 people in the industry.”

“When measuring the average salary against the average annual rent spend, those employed in the field would only be spending 21.68% of their salary on rent. Those wanting to work in tech remotely also have lots of options, with 27,563 remote openings available at the time of the study.”

The bad news is that Virginia stands out as having more tech vacancies per 100,000 people by far than the other top 10 states. A high level of tech vacancies may be advantageous to the workers, but it’s a restraint on economic growth generally.

Why the high level of vacancies? Continue reading