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 a 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.”
As previously noted on Bacon’s Rebellion, signs remain strong that resistance (against the dominant utility) remains futile despite the election flip. The legislation mentioned in that post to expands the State Corporation Commission to five judges, giving the new Democratic majority three of five seats to fill over next year, has passed its first hurdle and finally drawn attention of the news media.
The $8 billion current estimate of the cost for the offshore wind installation is just the capital amount, and does not include the financing costs and profit margins to be collected over decades. If built as planned, it will be the only such facility owned by an integrated monopoly utility directly. Other U.S. ocean wind projects are being built by investors who will merely sell the power to utilities or into the grid as merchant generators – far cheaper and less risky for customers.
Without question, the State Corporation Commission staff could explain all this and provide a solid estimate of the ratepayer impact. Its standing practice, however, is to only answer questions when directly asked. Seven months ago, during the utility’s integrated resource plan review, it was looking at a potential wind energy investment of under $1 billion. That’s now obsolete. The SCC staff was in the room today, but nobody asked.
Sen.Louise Lucas, D-Portsmouth, is the patron of the bill which dictates that all costs are reasonable and prudent. Portsmouth’s port will be ground zero, as Governor Ralph Northam announced the other day. A similar bill is pending in the comparable House subcommittee, with a Norfolk Democrat as patron. The entire Hampton Roads region is eager to start this, expecting major economic benefits (which would be the same, by the way, if it were a merchant generator project.)
Lucas’ bill now goes to the full Senate Commerce and Labor committee, probably Monday, and all concerned said negotiations on the final language are underway. Monday will produce a substitute, and changes could be made all the way to the Governor’s desk and then at the April Veto session.
Dominion lobbyist William Murray told the subcommittee all the bills may be rolled into one, and the cost concerns may be addressed by some sort of cap or “common assumption on cost estimates.” He pointed to how the General Assembly, in the Ratepayer Bill Transformation Act of 2018, dictated that the SCC approve that a major transmission line be built underground along I-66. One bad idea sets precedent for a worse one.
A few minutes later there were more expressions of concern for the forgotten ratepayers, this time over another Lucas bill setting up a program for Dominion-provided electric school buses. If you care about the details, read the impact statement, which once again says nothing about ratepayer costs. Dominion will own the buses (earning a profit) and fill their batteries (earning a profit). Browder was at the podium again expressing “similar concerns as with the previous bill,” but also said it might be worked out before a final bill passes.
Most speakers lined up to applaud. Children understand that climate change is ruining their future, one said. They stress over “the idea that they are going to school every day on something that is actually detrimental to them,” she argued.
Why would self-centered ratepayers complain about solving that problem with a new standing charge on their monthly bills? What’s a few more pennies a month?
