Grid Transformation Controversy Shifts to SCC Nominees

The legislative logjam over a controversial electric grid modernization program appears to have broken. The much-modified legislation, backed by Governor Ralph Northam and Virginia investor-owned electric utilities, has passed the House of Delegates and state Senate, and in the estimation of Richmond Times-Dispatch reporter Robert Zullo, “could be headed to … Northam’s desk by the end of the week.”

The legislation will enshrine the “investment model” advocated by Dominion Energy Virginia of using rate over-earnings to help pay for building the electric grid of the future, including more solar and wind power, energy efficiency, power-line burial, a pumped-storage facility, a “smart” grid, and hardening against cyber-sabotage and terrorist threats. Opponents say the law could lock in excess utility earnings for years.

Assuming the bills in both houses can be reconciled and enacted into law, the battle between Dominion, Appalachian Power Co. and their detractors won’t be over. The action just moves to the State Corporation Commission. The SCC staff and three judges will hold a series of evidentiary hearings on a long list of proposed investments, and they will balance the broad objectives of affordability, reliability and sustainability when deciding whether to approve the requests. Presumably, they will take into account the declaration of the General Assembly that grid-transformation projects are in the “public interest.”

The SCC judges will have latitude — exactly how much is not clear — to draw their own conclusions. So it very much matters who serves on the commission. And it very much matters who will fill the position to be vacated by Judge James C. Dmitri, who, among the three judges, arguably has been the most critical of the electric utilities.

Yesterday the Senate Commerce and Labor Committee interviewed three candidates to replace Dmitri:

  • C. Meade Browder, Jr., assistant attorney general,
  • David W. Clarke, a Richmond lobbyist representing gas and insurance companies, and
  • Maureen Matsen, legal counsel for Christopher Newport University and a former deputy secretary of natural resources under former Governor Bob McDonnell.

Committee Chair Sen. Frank Wagner, R-Virginia Beach, a long-time friend of the electric utilities, made it clear that he wants to see the SCC get with the program. Wagner accused the commission, reports Zullo, of an inability to “see the big picture” because of a narrow focus on electric rates and consumer costs.

Wagner compared the commission to a short-sighted business owner who can hoard money by failing to invest in his company but “will end up going out of business for failing to keep up.

“They take that myopic approach despite many statements, getting more and more bold, from the General Assembly as to what the policy is for the future of Virginia and ensuring that those investor-owned utilities make the necessary investments for the long-term good of all Virginians,” Wagner said.

The SCC judge candidates, who are appointed by the General Assembly, expressed support for the new direction of electricity regulation.

Said Brouder: “I’m aware of your particular interest in that area. … I think any commissioners would work within the regulatory framework that y’all have laid out.”

Said Clarke: “It’s clear to me that the sense of the General Assembly is that we need to have more investment. Those things don’t come without a price tag on them, no question.”

Said Matsen: The commission “needs to be a broader, wider vision” on how it handles “a tremendously dynamic and exciting time for the energy industry.”

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14 responses to “Grid Transformation Controversy Shifts to SCC Nominees”

  1. LarrytheG Avatar

    re: ” “They take that myopic approach despite many statements, getting more and more bold, from the General Assembly as to what the policy is for the future of Virginia and ensuring that those investor-owned utilities make the necessary investments for the long-term good of all Virginians,” Wagner said.”

    That’s a pretty scathing indictment and even if it’s only 10% true – it’s exceptionally damaging to the legitimacy of the SCC.

    I remember reading here in BR some things Dominion wanted to (prior to neutering the SCC).. and the story seemed to be that the SCC was not that interesting in more than the immediate “profit” issue and turned down things like demand-side technology… correct me if I’m wrong on that.

    I don’t have to be convinced. The SCC does have to change and they have to reinvent themselves into a 21st century regulatory function.

    Otherwise – they’re harmful not only to Corporate Utilities but also consumers.

    OTOH – I STILL do not think Dominion should decide what technology to adopt all by itself as there is too much room for skulduggery…

    One big goal ought to be – in my view – that Dominion actually gets in the business of residential solar..and it becomes a win-win for both Dominion and the homeowner… Right now – we see the interests of the ratepayers 180 degrees from the interest of Dominion and that’s just not reality.

    and no.. I have not changed my mind about their pipeline… bad karma

  2. Steve Haner Avatar
    Steve Haner

    I know all three of the candidates, and know two of them quite well (Browder and Matsen). All three are qualified and all three will fulfill their oaths if they get the job. Wagner’s comments notwithstanding, separation of powers lives. The legislators pass bills and think they have issued a direct command, but they sometimes forget that all sections of the Code matter and so do little things like the Constitution of Virginia and the United States Constitution and even that sneaky concept of precedent.

    The whining about the SCC is largely Dominion propaganda, fed by unbounded greed. The initial proposal on the burial of residential tap lines is an excellent example of unbounded utility greed, which is now tied up with a bow and ribbon by this new bill. On prior energy efficiency proposals the SCC applied the RIM test as the law required and on behalf of clients I beat back earlier efforts to dilute the RIM test. Even so, plenty of demand management programs exist. Now the RIM test is gone and the non-cost effective ones will also be approved. The SCC was focused on low consumer cost and real cost-benefit analysis because 1) the law required that and 2) intervenors in cases pushed back against unbounded utility greed. Dominion tried to gut the SCC authority to review costs for “reasonableness and prudence” but we did knock that back into the bill.

    But Dominion changed the law substantially and if it fails to get what it wants, if it has its unbounded greed checked again, well the General Assembly happens every year. That giant team of lawyers and lobbyists needs things to do.

  3. LarrytheG Avatar

    Well.. I’m a critic of Dominion but I still think the SCC needs to do something other than stand there…. I’m one who believes in regulation – that it is a legitimate thing.. but at the same time – regulation has to adapt to the changing business environment and if they don’t – or the perception is that they won’t.. then they’re going to get whacked.. in this day and time.

    We could see Dominion as greed personified.. but some of their complaint does have merit… and if the SCC does not respond .. they’re going to be gutted…and in the end – it’s not just Dominion that had a role in it – they seem to have few real defenders these days.

  4. The need for the SCC has passed, Sen. Wagner believes he is smarter and more prescient than the SCC judges and staff. If you don’t believe me, just ask the arrogant oaf. He has become increasingly arrogant and overbearing, talking over those he disagrees with, cutting off dissent and generally comporting himself as Dominion’s bully.

  5. Rowinguy1 Avatar

    In 1904, the people of the Commonwealth of Virginia created the State Corporation Commission to protect themselves against the General Assembly, who could or would not stand up to the railroad interests. The SCC is not, as so many public utility regulatory commissions around the country are, an executive branch agency. Nor, until just recently, has it been a subordinate of the General Assembly. The long-term implications of the Virginia Supreme Court’s decision upholding the constitutionality of the rate-freeze statute are yet to be known, but it certainly does appear to have emboldened certain legislators, based on the rhetoric on display yesterday.

  6. djrippert Avatar

    Things to remember:

    1. Virginia is the only state in the union where politicians can raise unlimited campaign contributions and spend the proceeds on personal expenses unrelated to political campaigning.

    2. Dominion is the largest private campaign contributor in Virginia.

    3. Virginia is the only state where the legislature appoints the regulatory commission. In all other states the equivalent of the SCC is either elected or appointed by the governor.

    4. Virginia is one of only two states where the legislature appoints the state’s judges without so much as a merit commission.

    So, Dominion legally donates a fortune to individual politicians who quasi-legally use that money for private club memberships, steak dinners out of state, etc. Those same legislators then reward Dominion by passing laws favorable to the company. If the SCC objects the legislature over-rides their regulatory authority and appoints commissioners who are friendly to the utilities. If a lawsuit is brought the judges have to consider that their re-appointment to the bench is dependent on the politicians lining their pockets with Dominion’s money.

    Virginia’s General Assembly is corrupt by design. Certain lawmakers like Chap Petersen have done their best to pull Virginia out of the ethical sewer it’s in. For example, he sponsored legislation to forbid regulated monopolies from making campaign contributions. Unsurprisingly, it was quietly killed in committee.

    How anybody can look at the bullshit that goes on in this state and wax poetically about “The Virginia Way” is beyond me. Virginia is a banana republic.

    1. LarrytheG Avatar

      DJ – you are absolutely right about the ability of elected in Virginia to keep the money for themselves. Some call it “free speech”.. Others.. defacto, legalized bribery.

      The “Virginia Way” to some means the way Virginia started out – with the landed gentry running the State and others.. the work that needed to be done. There’s always been a tinge of the “betters”…….

      1. djrippert Avatar

        The free speech argument revolves around making the contributions not using the money for personal expenses. Federal politicians are forbidden from using campaign contributions for themselves. In addition, 46 states have campaign contribution limits to individual candidates so I struggle to understand how Citizens United affected those limits. You still can’t make unlimited campaign contributions to Federal candidates.

  7. Virginia, bought and paid for by VEPCO.

    Wait until everyone gets what they want. Check out Germany. They have loads of solar and prices so high it will kill the US.

  8. Steve Haner Avatar
    Steve Haner

    Watch out, VN. Look what happened to Ken Cuccinelli on an allegedly Republican media outlet when he pointed out that a big move to renewable might raise rates. An unsigned character assault. FACT CHECK? Nope, I don’t think so….Straight from Dominion’s PR department? Maybe. I see a couple of bullet points from the same talking points I’ve seen circulating at the GA. Bacon is deep in this network now, Kool-Aid by the gallon. I think he still has a soul so I keep posting, but I’m losing interest.

    Rippert, you don’t know the half of it.

    1. djrippert Avatar

      “Rippert, you don’t know the half of it.”

      Sadly, I am sure you are right.

  9. …they are looking at the pubic as “chumps” who will not organize to ask for fair treatment. They think can get away with it, and they can. Nobody cares because divisive national politics is the focus. Politics seems not so much money, as finding areas where a special interest can be favored because the more diffuse general public is not in a position to understand they have been sold down the river.

    1. djrippert Avatar

      The only way I see to address this is for Chap Petersen to run for governor. He has been very out front on trying to pass legislation to clean up Virginia. Tax breaks that expire, banning political donations from regulated companies, etc. He hasn’t gotten much (any?) of that type legislation passed. However, a gubernatorial race is a whole new level of visibility. Petersen says, “I don’t think Dominion should be able to make political contributions.” What does his opponent say in response? “Oh I think they should be able to keep making unlimited contributions.” Man, you’d lose a lot of votes fast with that stance.

      1. I think Chap has my vote…at least at first thought.

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