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. 

This bill, introduced by Democrat Jay Jones of Norfolk and Republican Lee Ware of Powhatan, basically releases all the legal handcuffs and clears all the roadblocks so the SCC can do a proper rate case for Dominion Energy Virginia in 2021. The rate case is already scheduled, but with the current law as written by and for Dominion the game is largely fixed.

The bill’s very brevity – one page – is its strength. It assumes that the SCC, given the chance, will produce a result fair to all concerned, leaving the company profitable and fully viable to proceed with needed investments (but maybe not so many that are not really needed.) Here is a news release from the patrons.

When the General Assembly created a new regulatory system in 2007 it did not repeal the previous set of rules, known to practitioners by its location in Title 56:  Chapter 10. Under Chapter 10 and the many precedents from cases tried with those rules, the SCC has broad authority to accept or reject costs the utility seeks to impose on its customers, to rebate profit above allowed and margins and, most important to set proper base rates going forward.

Immediately following the adoption of the 2007 regulation revisions, several legislators put in bills seeking to return to Chapter 10. They were defeated with the help of many of us who worked on that deal, but soon after we came to regret it. The key to the whole 2007 arrangement was exactly this kind of top-to-bottom rate case that determined the correct base rates. In 2009, with a massive cash payoff, the utility gutted that promise and kept its excessive rates intact. They remain intact more than a decade later.

Suppressing those earlier attempts to restore Chapter 10 authority was my sin, one I began to overcome with later efforts to defeat successive bills that further weakened the SCC’s oversight and authority. Educating voters through writings here has been a part of my penance.

But Chapter 10 is back. A full Chapter 10 review in 2021 is exactly what Virginia needs. There are dozens of other proposals this year to further tinker with the new regulatory scheme, including a massive re-write to allow full retail choice. Some may have great merit, but all should be secondary to this one goal: Measure the amount of excess profits to date and return them to customers, and then set the correct base rate going forward to prevent more excess profits.

It is the presence of so many competing ideas that concerns me. Large industrial customers have a bill to make it easier for them to choose different suppliers. Ware himself is co-sponsoring the bill to create retail choice for all customers. Various environmental groups want to create additional carrots or sticks for their favored renewable energy projects and goals. Governor Ralph Northam has placed a huge pile of political chips in front of that ridiculously expensive offshore wind development, and Dominion may claim this bill prevents that.

All those tribes need to unite on this one issue. But in the next few weeks Dominion will work the table like a skilled billiards player, banging these various interests against each other.

In the House of Delegates, with so many new faces on both sides of the aisle, there are few remaining on the sinner’s bench from those earlier legislative battles. So many have left, voluntarily or not, that there may be enough newcomers to pass this in that body. But those veterans who strayed in the past should find the straight and narrow now.

The Senate is another matter entirely, with less turnover and a deeper history of supping with the publicans and tax collectors. These sins against Virginia’s energy consumers have deeper, stronger roots in the Senate. But those prodigal sons and daughters can still be redeemed, as well, and the congregation needs to urge them to find their way to the mourner’s bench.