Category Archives: Regulation

Offshore Wind Mandate Advances, Cost Ignored

By Steve Haner

Smart lawyers, and the General Assembly is full of them, don’t ask questions unless they know the answer already and want the information included in the debate. Nobody down at the General Assembly is asking what it will cost Virginians on their monthly bills to build massive offshore wind facilities to generate electricity.

Case in point, a meeting of Senate subcommittee still underway as this is being written. The Energy Subcommittee of the Senate Commerce and Labor Committee has endorsed two Senate bills that will dictate to the State Corporation Commission that it must allow Dominion Energy Virginia to build its proposed 2,600-megawatt turbine farm and pass the costs to ratepayers.

Senate Bill 860 actually dictates that up to 5,200 megawatts shall be found “in the public interest,” including projects built off the shores of neighboring states, and covers power purchase agreements. Senate Bill 998 is tightly focused on the Dominion-built project off Virginia Beach, but goes beyond the “public interest” declaration. It tells the SCC to accept the full cost as “reasonable and prudent” and pass those costs on to ratepayers. Probably over 30 years. With an enhanced double-digit all-but-guaranteed rate of return.

This will be the financial equivalent of Virginia residents and businesses in Dominion’s captive territory paying for a new U.S. Navy aircraft carrier. It will be that many billions and billions of dollars, and it will have a shorter useful lifespan than the carrier’s 50 years.

The bills were presented this morning with barely a peep from subcommittee members. All the witnesses but one spoke strongly in favor of them, and that one speaker – Senior Assistant Attorney General Meade Browder – was the entire “opposition” line but merely expressed his office’s “concern” about the cost impact on ratepayers, not actual opposition. He spoke only on the second bill, the one that dictated “all costs” shall be deemed “reasonable and prudent.”  Continue reading

Finished with the Second Amendment Virginia Dems Now Attack the First (and Sixth)

By DJ Rippert

Sticks and stones? Del. Jeffrey M. Bourne, D-Richmond, has introduced HB1627.  The bill is entitled, “Threats and harassment of certain officials and property; venue.”  The proposed legislation strengthens a series of very questionable laws already on the books.

The first few sections of the existing law make it illegal to make threats in written communications to kill or do bodily injury to a person in a variety of occupations and situations. For example, threats to elementary school, middle school or high school employees are called out in the existing legislation. Similarly, threats made on school buses, on school property, or against health care providers are also explicitly illegal. Beyond wondering why certain classes of people or places deserve extra protection from death threats or threats of bodily harm the existing legislation seems pretty straightforward. Ill-conceived and overly limited but straightforward.

Then comes the section entitled, “Harassment by computer, penalty.” This section goes well beyond outlawing death threats and threats of bodily harm. It specifically references Virginia state politicians as needing legal protection from such things as threatening illegal or “immoral” acts. Continue reading

Governance Nightmare: Integrating Hospitals and HMOs

Sentara: the epitome of Big Medicine

by James C. Sherlock

Del. Sally Hudson, D-Charlottesville, has introduced a terrific piece of legislation, HB 1731. The bill tackles for the first time an increasing threat to competition, cost, availability, consumer choice and quality of health care in Virginia — the vertically integrated carrier.

The combination of hospitals and insurance carriers has captured the attention of neither the media nor the political class, but it is a fundamental driver of runaway healthcare costs in Virginia.

To illustrate the impact of vertically integrated carriers in the marketplace, consider Sentara Health’s offering of its Optima HMO plans in Charlottesville and surrounding counties in 2018 — Hudson’s legislative district. Optima was the only carrier that year to offer plans on the Affordable Care Act (Obamacare) marketplace in multiple locations where Sentara had hospitals. The people depending upon the federally administered program found that their only option, Optima, charged the highest plan prices in the United States.

A 40-year-old couple with two kids had to pay $40,000 in premiums for a Silver Plan. Plus they were liable for up to $11.700 in co-pays and deductibles. Sentara Martha Jefferson Hospital was included in the network. The University of Virginia Medical Center was not. All in the family. Similar scenes played out in other areas of Virginia where Sentara had hospitals and Optima was the only ACA seller. Continue reading

“No Kill” Bill Returns to Reignite Animal Wars

Richmond’s Tommie during the five-day effort to save him from horrible burns a year ago. The man who burned him said he tried to put the dog in a shelter but was refused.  Photo: The News and Advance.

By Steve Haner

Another attempt to impose the “no-kill” philosophy on Virginia’s animal shelters is pending in the Virginia Senate, sponsored by a rural Republican who is the great champion of that (so-far) failed cause. After a long subcommittee hearing Thursday, his bill was put back in the shelter pen to await its fate for another week.

If you think gun control is the most contentious issue facing legislators year in and year out, sit in sometime on a meeting of any subcommittee dealing with animal bills. Read the emails generated by the passionate advocates, which can be among the nastiest in inboxes. Legislators dread these issues.

For five years I was in the middle of the Animal Wars as the lobbyist for People for the Ethical Treatment of Animals. Its world headquarters is in Norfolk and as part of that it runs a regional animal care operation that includes a private shelter with a wide-open admission policy. That means PETA’s licensed shelter has a high euthanasia rate, making it a national and even international hate target for the no-kill movement.  Continue reading

Odd Bedfellows: Trump and Northam Administrations Combine to Protect Virginia’s Menhaden

By DJ Rippert

Cats and dogs sleeping together. The long running saga of the General Assembly and Omega Protein vs. environmentalists and the Virginia Marine Fisheries Commission (VMFC) took a major turn recently. Our General Assembly (buoyed by campaign cash from Omega Protein) sought to use inaction to thwart the VMFC’s scientific management of a small fish called the menhaden in Virginia waters. The VMFC enlisted its east coast umbrella organization, the Atlantic States Marine Fisheries Commission (ASMFC), to cut Omega’s menhaden limits. Omega resisted citing General Assembly inaction on reduced limits as tacit approval of higher limits. The ASMFC (along with support from the Northam Administration) appealed to the Feds and won. The lower limits will stand whether the General Assembly likes that or not. The net result is that the General Assembly appears to have been forced into a corner. It seems that no amount of campaign contribution cash will get them out of that corner. Beyond the Battle of the Menhaden, this contest forces a question – is the unholy alliance between our state legislature and various special interests finally starting to crack? Continue reading

Lawmakers Coddling Hospital Monopolies

Sen. George Barker (right) and assorted local dignitaries at opening of the Inova Alexandria Hospital in 2012.

by Jim Sherlock

My last essay, “Runaway Costs and Hospital Monopolies,” discussed the fact that Virginians who get their health insurance at work and through the Affordable Care Act website pay the highest premiums in the country. We traced those costs to a number of sources, including the Certificate of Public Need (COPN), Virginia Department of Health (VDH) protection of regional monopolies through its administration of COPN, hospitals acting like monopolies without oversight, and the increasing integration of health insurers and monopoly providers in Virginia’s largest markets.

COPN is the most spectacular example of rent seeking in Virginia history. By the early 1970’s, African-American hospitals had closed because Federal equal-access laws desegregated white hospitals. Black surgeons were looking to open viable practices. The General Assembly enacted COPN in 1973 as a parallel effort by a segregationist Democratic leadership to exclude black doctors and by white hospitals to exclude new competitors of any color. It worked.

The biggest trend in surgery continues to be the migration of surgery from inpatient to outpatient settings. So, if hospitals can’t buy physician practices, they neuter them with a combination of COPN and hyper-aggressive leverage of their regional monopolies and integrated networks, including the ownership of health plans.

Now hospitals want more. Bills introduced in the General Assembly this session would toughen COPN restrictions on competition, drive up costs, reduce access, and negatively impact career opportunities for physicians. Continue reading

Virginia Likely to Avoid “Marijuana Legalization Trap” in 2020

By DJ Rippert

Reefer madness. Virginia is notably lagging most other states in marijuana reform. Across America recreational marijuana is legal for adults in 11 states and legal for medical use in 33 states. Twenty-five states have decriminalized the possession of small amounts of marijuana. In Virginia marijuana is illegal, criminalized and unavailable for medical use. Yet change is blowing like smoke in the wind. As of today, there are six decriminalization bills pending in the General Assembly along with three bills for expungement of prior convictions, two legalization bills, and four bills to implement a medical marijuana regime in Virginia. Depending on which bills pass …  Virginia could be looking at a near-term marijuana environment much different than its prohibitionist past. However, there are some combinations of events that could lead The Old Dominion into unintended (and negative) consequences.

Roach trap. One likely outcome from the 2020 General Assembly session is that possession of small amounts of marijuana will be decriminalized while efforts to legalize the recreational and medical use of marijuana will fail. This could put Virginia in a very sub-optimal position if neighboring states legalize marijuana. Virginia is a small state bordered by five other states and the District of Columbia. A very high percentage of Virginians live within an easy drive of neighboring jurisdictions. If Virginia decriminalizes while neighboring states legalize, the result will be effective untaxed legalization in much of Virginia. A surge of Virginians will drive over various borders to bring back marijuana purchased legally elsewhere. Marijuana use would increase in Virginia while none of the financial benefits of legalization (via taxes) would accrue to Virginia. But how likely is it that neighboring states will legalize recreational marijuana in 2020? Continue reading

Poll Showing Majority Support for COPN Is Meaningless

Source: Virginia Hospital and Healthcare Association

by James A. Bacon

A new Mason-Dixon poll of 625 registered voters commissioned by the Virginia Hospital & Healthcare Association (VHHA) finds that Virginians prefer to keep the Certificate of Public Need program by a three-to-one margin.

“Overall, nearly two-thirds of Virginians (62 percent) express support for the current health care delivery system with COPN in place,” states a press release accompanying the poll. “These findings are consistent with results from a June 2019 statewide poll in which 55 percent of Virginians said they support preserving COPN, compared to just 13 percent in opposition to the program.”

Critics of COPN say that Virginia’s major hospital systems have gamed the regulations to stifle competition with one another, shut down competition with physician-backed ambulatory care centers, and carve out geographic monopolies. Thanks to the regulations, Virginia’s “nonprofit” hospitals enjoy hundreds of millions of dollars in additional profits. Hospitals defend the regulations on the grounds that interlopers would “skim the cream,” providing care to the most profitable patients and dumping less profitable patients on hospitals.

The poll results are a dubious measure of public opinion, however. Continue reading

Analysis: Only Assembly Can Impose Carbon Tax

By Steve Haner

It is illegal in Virginia for a petroleum wholesaler to arbitrarily reduce the amount of product it provides to retailers. The General Assembly has intervened in that marketplace, probably for the reasonable public purpose of preventing price gouging. Regulating the sale of fuel for some other purpose should also require action by the General Assembly.

The “other purpose” under scrutiny at this time would be reducing carbon dioxide emissions into the atmosphere. David Schnare of the Thomas Jefferson Institute for Public Policy was researching whether the governor could impose the Transportation and Climate Initiative on Virginia without General Assembly action. He found and cites the existing state law against rationing gasoline and other legislative oversight of that market in an analysis published today.

Schnare holds both environmental and law doctorates and served 34 years with the federal Environmental Protection Agency. His conclusion is the Governor lacks the authority to act arbitrarily through an executive order or agency decision.  t was the same conclusion reached recently by the Supreme Court in Washington state in reviewing and rejecting a cap-and-trade effort from that state’s governor, Jay Inslee.

Here’s the take on that from the Wall Street Journal editorial board:

Good news: The political panic over climate change doesn’t justify one-man rule. That’s the message the Washington Supreme Court delivered this week to Governor Jay Inslee, who tried to impose his command-and-control agenda by fiat.

Perhaps you heard Mr. Inslee for a millisecond in the presidential race last year declaring that climate change is “the most urgent challenge of our time.” He failed to galvanize the masses, much as he failed to persuade the Washington Legislature in 2015 when it rejected his cap-and-trade proposal.

Continue reading

Rate Case Bill Offers Repentence to Legislators

By Steve Haner

Sinners! The hour of redemption is at hand! For years now some of you have deprived your fellow Virginians of a fair hearing in front of the judges set above them. To deny justice is among the worst of abominations, but a chance for salvation has appeared.

Yes, I am talking to the many Virginia legislators who helped protect the profits of the state’s dominant electric utility from proper review and adjustment. You have corrupted the law with “this is in the public interest” and “refunds shall not be ordered unless” and “rates may not be reduced until” and “this shall be deemed reasonable and prudent.”  The judges you have fettered with these phrases sit on the State Corporation Commission

Some of you fell from grace in this way in 2013, 2014, 2015 and then again in 2018. One correct vote in 2020 can wipe the slate clean, returning your political souls to purity.

With passage and implementation of House Bill 969, all will be forgiven. Even this author of countless energy Jeremiads will praise your return to the fold. But woe unto you who fail to heed this final trumpet and abandon the people again. The day of decision is here.  Continue reading

Marijuana Decriminalization in Virginia: Issues and Recommendations for Regulators

Photo credit: Snopes

By Don Rippert

Ready, fire, aim. In Virginia, it seems likely that the Democratic Party’s control of the General Assembly and Governorship will result in decriminalizing possession of small amounts of marijuana. This legislation will likely be passed in the 2020 session and go into law next summer. But what are the details of decriminalization? What specific policy decisions should our lawmakers consider when drafting the decriminalization legislation? Failing to consider these issues in advance of the legislative session could usher in a repeat of the shambolic attempt to legalize casino gambling in Virginia

Continue reading

Virginia marijuana reform: Outlook for 2020

By Don Rippert

Cannabis certitude. The seemingly inexorable march toward legalized marijuana in the United States continues unabated. A poll of 9,900 American adults conducted by the Pew Research Center from September 3 – 15, 2019 found that 67% of the respondents thought cannabis should be legalized. That’s five percentage points higher than Pew’s last poll on the subject conducted in 2018. Many state legislatures are acting on behalf of their constituents. Legal weed sales began last Sunday in Michigan and will commence on New Year’s Day in Illinois. At the federal level the House Judiciary Committee approved a bill legalizing marijuana at the federal level. As of today 33 states have legalized medical marijuana and 11 states have approved the sale of recreational marijuana to adults. Six more states seem very likely to make decisions on legalizing recreational marijuana in 2020 – Arizona, Arkansas, Florida, Missouri, New Jersey and South Dakota. As legal marijuana becomes big business pundits are predicting the future of legal weed. Arcview Market Research and BDS Analytics believe that medical marijuana will be legalized in every state by 2024 and recreational marijuana will be legal in 20 states by that date. Virginia is not among the 20.

Weed in the Old Ancient Pre-historic Dominion. Virginia is one of 15 states where marijuana is fully illegal. (Note: I do not count CBD oil sales as partial legalization). The first step on the long road to legalization is usually decriminalization. In 2018 Virginia’s General Assembly considered a bill to decriminalize possession of small amounts of marijuana. It was killed along a purely party line vote in the Senate Courts of Justice Committee.  In 2019 another decriminalization bill was considered. Virginia’s Republican leadership in the General Assembly couldn’t muster the minimal courage to take the 2019 bill to the full committee and killed it in sub-committee. Later that year the Republicans got their heads handed to them in the General Assembly election. What a surprise.  Now Democrats hold a trifecta in Virginia with control of the House, Senate and Governorship.  Once again, Sen. Adam Ebbin (D-Alexandria) is the patron for proposed legislation to decriminalize possession of small amounts of marijuana. However, this year unlike the past, Ebbin’s party is in control.

Continue reading

Ignore the ROE Decision. Dominion Gets It All.

Crying All The Way To The Bank

By Steve Haner

After a long, expensive and contentious legal battle producing a huge case record, the State Corporation Commission left Dominion Energy Virginia’s authorized profit margin unchanged Thursday.  The return on equity figure did not go higher, as the utility demanded, and did not go lower, as just about everybody else involved in case demanded.

The SCC order is here.

You will see report after report in news media now that the authorized return is 9.2%, such as this one. This is wrong. The authorized return, because of Virginia’s uniquely pro-stockholder state law, is really 9.9%. The law allows the utility to keep 100 percent of the first 70 basis points of excess profit above the stated allowed profit.  With the large amounts involved over multiple years, that extra 70 basis points is real money out of your pockets.  Continue reading

Northam Appointee Opposes DEV’s Green Tariff

Virginia City Hybrid Energy Center in St. Paul, which burns both coal and wood biomass. It is the centerpiece of Dominion’s proposed 100% renewable service, infuriating environmental opponents. Dominion photo.

By Steve Haner

Is Governor Ralph Northam now on both sides of the electricity retail choice issue? Having sent a strong signal weeks ago that he would oppose 2020 legislation creating competition for all customers, his administration has now intervened in a regulatory dispute asking to protect competitive choice for 100% renewable electricity. You are only free to choose if you choose green?

In order to stop other companies from selling so-called 100% renewable electricity in the Dominion Energy Virginia territory, the utility needs its own version of this shell game approved by the State Corporation Commission. The next hurdle in that long road is a hearing at the SCC Thursday.

When we visited this saga in August, Dominion’s application for what it calls Rider TRG had been filed but few of the likely opponents had responded. A long list of complaints about the idea is now part of the case record, including objections from the Northam Administration filed Friday in the name of the Department of Mines, Minerals and Energy.

Continue reading

Getting Serious about Flooding

Click image to enlarge. Source: Governor’s Office

by James A. Bacon

Everybody talks about the weather, as the old saying goes, but nobody does anything about it. Well, here in Virginia, people are getting serious about one aspect of the weather — flooding.

Last week Governor Ralph Northam issued an executive order, the Virginia Flood Risk Management Standard, to encourage the “smart and resilient construction of state buildings.” Based on sea-level rise projections developed by the National Oceanic and Atmospheric Administration, the new standard requires state-owned buildings constructed after 2021 to be built at elevations that will protect them from flooding.

“Flooding remains the most common and costliest natural disaster in Virginia and in the United States, and our state government is getting prepared. These standards will protect taxpayers by establishing critical protections for new state-owned property,” Northam said in a press release.

Meanwhile, the City of Virginia Beach is grappling with the reality that it needs an extra $20 million a year to improve its stormwater infrastructure. Continue reading