Rage, Ruin, And You Pay The Bill In Full

I hear hurricanes a blowin’
And I know the end is coming soon
I fear rivers overflowing
I hear the voice for rage and ruin

Bad Moon Rising, Credence Clearwater Revival

The acronym we all must learn for the 2019 General Assembly session is “CCR,” but it doesn’t stand for Credence Clearwater Revival.  Coal combustion residuals – coal ash – are the environmental poster child of the moment, with the apocalyptic vision a hurricane or other event flooding the material into rivers.  John Fogerty, the prophet.

Legislation dealing with the issue will probably get good coverage in the standard news media, and Senator Scott Surovell’s Senate Bill 1533 may get through to Governor Ralph Northam for signature.  What is not mentioned in his or the other CCR bills, and not being reported, is who will pay for this process if the General Assembly orders the ash moved or recycled or both.

In the classic hide the-pea-game so common at the Assembly, two other bills which have not yet drawn attention outline a payment method which is highly favorable to the utility, perhaps in more ways than one. (So far only Dominion–owned landfills are targets of the legislation, but environmentalist won’t stop there.)

House Bill 2786 was filed only Friday, the deadline for bills, but the identical Senate Bill 1355 has been in the hopper for a while.  Here is the key paragraph contained in both (and the bills are only two paragraphs long.)

  • 2. Costs associated with any permit issued by the Department for the closure of a CCR surface impoundment located within the Chesapeake Bay watershed, as well as any permit issued by the Department for the purpose of capping in place, removing, or beneficially reusing any CCR from the site of any current electric generation unit as of January 1, 2018, or any former electric generation unit permanently retired or placed into cold reserve prior to January 1, 2018, shall be deemed in the public interest and recoverable in accordance with the provisions of subdivision A 5 of § 56-585.1 of the Code of Virginia. Any such costs shall be fully allocated to all customers as a non-bypassable distribution charge, irrespective of the generation supplier of any such customer.

“Shall be deemed in the public interest…” is the General Assembly once again making policy that otherwise might fall to the State Corporation Commission.  The good news is the bills do not override the Commission’s authority to determine what is reasonable and prudent.  Not yet.

“…and recoverable in accordance with the provisions of subdivision A 5 of § 56-585.1 of the Code of Virginia”  means that the utility can recover all of the costs through a rate adjustment clause (RAC), a stand-alone separate charge on everybody’s bill lasting years and years.  Dominion is in the process of establishing a new rate adjustment clause for environmental costs.

But here’s the key: “Any such costs shall be fully allocated to all customers as a non-bypassable distribution charge, irrespective of the generation supplier of any such customer.” All customers inside Dominion territory, connected to Dominion distribution lines, will pay for the coal ash removal even if they have a third-party supplier or generate most of their own power.

Does layering on this charge change the economic incentive for a large user to seek a competitive supplier? For a homeowner to seek an outside renewable energy supplier?  Maybe not.  But there are other bills pending at the Assembly creating other barriers to third-party suppliers, and the effects may be cumulative.  Stomping competition is this year’s grid mod.

Every customer will pay if this passes and becomes part of the directive to the SCC.  But if the cost is “fully allocated” to customers, does that mean none of the cost will be paid by the companies’ shareholders?   It seems to.  None of the costs will be spread more broadly through the economy by using tax money?  Is the General Assembly about to stick only customers with this bill?

Secretary of Natural Resources Matt Strickler said Monday the Governor is “agnostic” on how to pay for the coal ash disposal or recycling.  He made the comment during a meeting of legislators and renewable energy advocates, where Michael Town of the Virginia League of Conservation Voters later chimed in that its only fair that ratepayers get the full bill.

Past sessions have demonstrated that introduced bills change drastically as the legislative process moves.  Miss committee meetings at your peril.

What appears undisputed is that the steps being demanded in the Surovell and the other CCR bills go beyond what the federal Environmental Protection Agency now requires.  In yet another step away from the conservative approach of past years, Virginia may opt for regulatory requirements way beyond national standards.  The marginal cost is not a regulatory mandate,  but a political one.

The bill patrons will cheer when the ash is buried in somebody else’s district, and the financial consequences will be buried on your electric bill.  The distinction between utility ratepayer and Virginia taxpayer continues to disappear.  The General Assembly is equally willing to pile costs on Virginians both ways.