The Politicization of Energy Regulation in Virginia

Photo credit: Richmond Times-Dispatch

Earlier this week the Richmond Times-Dispatch published an in-depth series tracing the history of the relationship between Dominion Energy, the General Assembly and the State Corporation Commission over the past twenty years. Michael Martz and Robert Zullo conducted dozens of interviews and reconstructed the complex history of electric utility oversight during a tumultuous period that saw a shift from regulation to deregulation, then back again.

The main thesis of the first article is that the relationship between the regulated and the regulators fundamentally changed around 1995. Until that time, the Virginia Electric & Power Co. (known as VEPCO) had its own board of directors and operated with considerable independence. Parent company Dominion amounted to little more than a holding company for the utility, which comprised 90% of its assets. But in a titanic boardroom struggle, which the Times-Dispatch recounts in great detail, Dominion CEO Thomas Capps ousted VEPCO President James T. Rhodes Jr. In the years that followed, Dominion acquired the Consolidated Natural Gas Co. in a $8.3 billion deal, transforming Dominion into a multi-state energy giant, dissolved the VEPCO board, and stepped up its involvement in Virginia politics and policy through its lobbying efforts and campaign contributions.

The second article chronicles the shift from regulation to deregulation and then, when experiments with deregulation around the country appeared to be failing, back to regulation — under the guidance of Dominion each step of the way. The end result of 20 years of legislative tinkering, the Times-Dispatch argues, was weaker oversight by the SCC, which Dominion cannot influence politically, and greater involvement of the General Assembly, which Dominion can influence. The culmination of this decades-long process was 2015 legislation that froze electric rates in response to uncertainty created by the unveiling of the Environmental Protection Agency’s Clean Power Plan and the locking in of what one SCC judge estimates will be $1 billion in excess profits over seven years.

In the final piece, the Times-Dispatch suggests that Dominion’s grip on Virginia politics may be loosening. The 2015 rate freeze has come under heavy fire for its proposal to build the Atlantic Coast Pipeline, its construction of unpopular transmission lines, its plans for disposing of coal ash, and the pace with which it is adopting renewable energy sources. Not since the 1970s when the old VEPCO was experiencing massive cost overruns and rate increases has the utility found itself embroiled in so much controversy.

Regarding the big picture, the Times-Dispatch makes an important point: The General Assembly has become increasingly assertive in defining Virginia energy policy, and in so doing, it has whittled down SCC power. Whether this was Dominion’s doing or the General Assembly’s, however, is less clear. The series describes how SCC Judge Hullihen Moore alienated many lawmakers by appearing before a House of Delegates committee and lectured them in a tone that many found condescending. That action adversely affected relations with key legislators and staff for a number of years.

The Times-Dispatch overlooked opportunities to describe other examples of lawmaker assertiveness. Especially noteworthy were laws initiated by Southwest Virginia legislators to spur economic development by creating favorable regulatory treatment to Dominion for building its $1.8 billion Hybrid Energy Center in Wise County and, in an encore, for building a proposed $2 billion pumped-storage facility in the region. The hybrid-energy plant, which burns coal, coal waste and wood, has a generating capacity of 600 megawatts. By way of comparison, the recently constructed Brunswick Power Station, which cost $1 billion, has a capacity of 1,358 megawatts. The two projects are not directly comparable because the hybrid energy center burns coal waste, which reduces an environmental hazard. But the fact remains that on a cost-per-megawatt capacity basis, the Hybrid Energy Center was four times as expensive — economic development for the coalfields courtesy of Dominion rate payers in eastern Virginia.

Similarly, responding to incentives created by the General Assembly, Dominion is giving serious consideration to a $2 billion pumped-storage project in Tazewell County that would have a capacity of 850 megawatts. These two cases appear to be driven by old-fashioned pork barrel politics: Southwest Virginia legislators stacked the regulatory deck to induce Dominion to invest in their economically depressed region regardless of the cost to Dominion rate payers.

The 2015 rate freeze has a very different background. That legislation arose in response to the Obama administration’s Clean Power Plan. Several years previously, the Obama EPA had pushed through tough restrictions on mercury and other toxic emissions, which forced Dominion to shutter several coal-fired units, and lawmakers were concerned that the Clean Power Plan could have a comparable impact. In an early estimate, Dominion said that write-offs on four coal-fired power plants could reach $2.1 billion, while the SCC estimated that ratepayers could be stuck with $5.5 billion to $6 billion to replace the lost capacity with new electric generating facilities. Governor Terry McAuliffe was so worried that he personally lobbied EPA chief Gina McCarthy to modify Virginia’s CO2 emission targets.

Nobody knew the cost for sure because the Clean Power Plan gave states several options for curtailing their CO2 emissions, and the final cost would depend largely upon which option the McAuliffe administration selected. Adding to the uncertainty, the plan faced legal challenges on constitutional grounds, and there was always the possibility, seemingly remote at the time, that a Republican might be elected president in 2016 and reverse the plan. The potential cost of compliance was a moving target, ranging from nothing to multiple billions of dollars.

The Times-Dispatch series did a fine job of summing up the political controversy that arose after the long-shot election of President Trump. If Trump was determined to scrap the Clean Power Plan, some legislators argued, what justification was there for a rate freeze any more? But the articles did little to illuminate the context that faced lawmakers and the McAuliffe administration when they negotiated the freeze. As should surprise no one, a lot of sausage-making went into the 2015 deal.

The law froze the base rates for Virginia’s electric utilities. Base rates, which cover mainly operating expenses, account for about half the total retail cost of electricity. They do not cover adjustments for volatile fuel prices, nor do they include “riders,” which are rate adjustments to cover the cost of specific projects such as new generating plants, new transmission lines, or underground burial of distribution lines.

During negotiations over the rate freeze, Dominion agreed to several concessions of value to McAuliffe. The utility promised to spend an estimated $25 million over five years on weatherization programs for the poor. The law declared it in the public interest to build 500 megawatts of utility-scale solar power. And the utility agreed not to collect an $85 million fuel cost increases from 2014. The law also gave GOP legislators something they wanted: a requirement that Dominion could not close a coal-fired power plant without first obtaining SCC authorization.

The law froze base rates and exempted electric utilities from biennial rate reviews for seven years. While the company had a chance of accumulating substantial excess profits, it shouldered several major risks: not just the risk of some $2 billion write-downs if it was forced to close coal-fired units but eating the clean-up cost from hurricanes and other natural disasters, which strike on average every three or four years. Unrecognized at the time, the company also took on the risk of closing its coal ash ponds under an EPA ruling that would be issued a half year later. Dominion has had to eat some $400 million in coal-ash expense, only some of which it has been able to pass on to rate payers. That liability could skyrocket if state regulators make the company bury the coal-combustion residue in landfills rather than cap it in place.

In sum, when the law went into force in mid-2015, there were a wide range of potential incomes for Dominion. If everything went perfectly, the company could make out like a bandit. If it had to take big write-offs, it could lose big time. In either case, rate payers were insulated from the uncertainty and guaranteed stable base rates.

It is only in retrospect, with the election of President Trump and his decision to kill the Clean Power Plan, that some have concluded that Dominion robbed the bank. SCC staff has calculated that Dominion earned between $133 million and $176 million in excess profits in 2015 and 2016, which it would have had to return to rate payers were it not for the rate freeze. (The sum would have been far larger had Dominion not incurred $174 million in coal ash clean-up costs.) Dominion disputes the accounting behind those numbers, but concedes that the company is probably ahead thanks to the freeze… at this moment in time. But the freeze has several years to run, and the company is still exposed to significant risk. Even the prospect of coal plant write-downs has not entirely disappeared. The McAuliffe administration is working on its own CO2 regulatory plan, the impact of which at this time is unknown.

The Times-Dispatch series could have benefited from some of this context. Zullo’s article leaves a strong impression that Dominion’s campaign contributions and political clout won it a sweet deal with the rate-freeze law. The picture is more complicated than portrayed. While critics say Dominion could rake in an extra $1 billion thanks to the rate freeze, at the time the deal was struck the company was exposed to $2 billion in write-downs, potentially hundreds of millions more for weather disasters, and potentially hundreds of millions of more for coal-ash disposal, a risk it had not even identified at the time.

For purposes of argument, let’s assume that the state CO2 regulations will be toothless and that Dominion’s write-off risk evaporates. Does that justify undoing the freeze, as some legislators have proposed? In effect, Dominion’s critics want a heads-I-win, tails-you-lose proposition. If the deal had worked out badly for the utility, would anyone be clamoring to let it off the hook? Not very likely. The critics only want out now that it appears that Dominion might — not will, but might — come out ahead.

That said, Martz and Zullo highlight an important trend that has gone largely unnoticed in all the reportage and commentary about Virginia’s electric power industry. The General Assembly has asserted ever greater authority over the industry recent years. The SCC still is influential — electric utilities still must win SCC approval for major capital expenditures such as new power plants and transmission lines. But the General Assembly has hemmed in the SCC’s latitude for decision-making by declaring everything from hybrid energy centers and pump-storage facilities to solar power generation to be in the “public interest.”

As long as legislators view utility investments as economic-development plums, as long as environmentalists and their allies seek to re-engineer the electric grid around renewable energy, and as long as the federal government feels free to dictate energy policy to the states, the politicization of the energy sector in Virginia is probably inevitable. Between its lobbying team and campaign contributions, there is no denying that Dominion exercises immense clout in state politics. But it’s not the steamroller that critics say it is.

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38 responses to “The Politicization of Energy Regulation in Virginia”

  1. Steve Haner Avatar
    Steve Haner

    Corporations are not inclined to that level of charity. The legislation in 2015, just like earlier successful efforts to undermine or limit the SCC’s authority in 2013 and 2014, protected Dominion shareholders, not ratepayers. The three bills all had the same goal. The financial risk to the company from the coming EPA regulations was substantially overblown and the risk from any Virginia-only approach is even lower, given a friendly GA.

    After the 2013 legislation, during the subsequent SCC rate review, the Commission reported that Dominion’s base rates were likely to produce $280 million a year in excess revenue (above and beyond its allowed rate of return.) Earlier this year in a similar projection the Commission set that number as substantially higher, $395 or even $426 million per year. The Commission also estimated it could have ordered up to $175 million in refunds. But the 2015 law prevented those refunds or rate reduction, and prohibits them until 2022 at the earliest.

    Do the math: possible refunds of $175 million in this year’s bills and then a base rate cut going forward of about$400 million per year. That’s $2.2 billion back to the ratepayers over five years. Not happening.

    The base rates are excessive. They were somewhat excessive in 2007, and the system installed in 2007 was designed – intentionally – to move costs out of the base rates and into a series of rate adjustment clauses. It’s like going from a fixed price at the restaurant to ala carte (except you have to buy everything on the menu.) Of course the base rates should be going down.

  2. I don’t have the history that the rest of you have on this topic and I have not had time to read the T-D series. But I do have a few comments that come from my utility-regulatory experience in other states.

    The rate freeze being needed to deal with potential cost increases due to uncertain requirements of the CPP is a bogus argument. In testimony to the SCC regarding plans for future generation that might be required by the CPP, Dominion representatives testified that it was the Company’s intention to recover any charges related to generation adjustments required by the CPP through Rate Adjustment Clauses (RACs), not base rates.

    The fundamental utility-regulatory compact is that the regulator evaluates the expenses incurred by the utility, whether planned (new projects, retirements), or not (storms, extreme weather, unforeseen regulatory requirements – CPP, coal ash, etc.) and determines if those costs were prudently incurred. By comparing revenues and prudently incurred expenses, the regulator determines if the utility is over- or under-recovering compared to its approved rate of return. The regulator makes appropriate adjustments in base rates, riders, or other means (refunds) to provide an adequate return so that utilities can continue to attract investors and serve their customers.

    Nothing besides this already established regulatory review is needed to keep Dominion whole and protect the ratepayers. Interference outside of the evidentiary proceedings conducted by the SCC greatly skews the regulatory process and opens it up to political manipulation.

    I did not always agree with the regulatory decisions that affected my utility employers, but I did respect the process.

    The legislative body is supposed to establish the overarching principles and the regulator is supposed to implement them in an open, deliberative process.

    Utilities nation-wide are struggling with changes to their business model due to flat load growth and the ability of customers to self-generate with renewables. Forward looking states are revising the role of utilities and are changing the ways they are paid, so they can prosper in this new environment.

    In Virginia, it appears that we are trying to extend the 20th-century throughout most of the 21st, in order to favor utility shareholders at the expense of the ratepayers.

    We do not have to engage in a win-lose contest. Even the utilities will not benefit in the long-run from what seem to be short term wins. If we give the utilities a way to increase revenues while opening up to third-party participation, innovation and job creation, we will lower energy costs, stimulate our economy and have financially healthy utilities.

    Chasing handouts from the GA at the expense of our citizens will not create the same benefits.

  3. LarrytheG Avatar

    re: ” The rate freeze being needed to deal with potential cost increases due to uncertain requirements of the CPP is a bogus argument.”

    Yup. It’s pretty clear the SCC and the GA are looking out for Dominion to make sure they make every bit of profit they’re entitled to.. and then some.

    and as Tom says – trying to maintain a 20th century business model in a 21st century is something they’ve been somewhat successful at but in the end – they’re going to end up like Kodak if they don’t confront the change and adapt to it and do as well as that – as they are in manipulated the regulators and the GA.

    On the other hand – no matter how one feels about Dominion or utilities or renewables.. the situation in Puerto Rico has to make people think again about what they expect from companies like Dominion.. we are spoiled.. we expect 24/7 power and get discombobulated with 2 hour outages…

  4. TooManyTaxes Avatar

    I’ll make my point again. No one is representing the interests of the ratepayers. What we see is: Dominion on one side. Enviros on the other. Neither represents the interests of ordinary customers.

    Some of this problem stems from the process, the statutes and the Good Ole Boy way government runs in Virginia. But much goes to the laziness or what-me-care attitude of the public. Most people simply don’t get involved. Or worse yet, get their views shaped by the MSM.

    In a state like Virginia, there should be an office of consumer advocate to represent consumer interests. In the early 1980s, I helped write the Iowa statute that created an office of consumer advocate within the Iowa Department of Commerce that represents consumers before the now Iowa Utility Board. There needs to be a similar entity in the Old Dominion. It should take a hard look at, and when appropriate, oppose the views of Dominion and other intervenors, including the Enviros. This need not be war, but every other position should be challenged as appropriate. Make the other parties prove their arguments.

    From the federal perspective, I blame Obama for pushing the EPA to adopt a plan to recreate the electric power industry without statutory authority. We have a Constitution that incorporates separation of powers.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      Excellent comment, TooManyTaxes.

      I agree totally but I would add that is also a battle between many special interests that are at war, each with one another. This is because each competitor has huge amounts of money at risk, whether it be the coal industry, or gas, or nuclear, or wind, or solar, the many environmentalists interests, or high tech, or Democrat, and Republican, or Federal or state, or local, with Dominion caught squarely in middle.

      All these special interests claim falsely to be working in the public interest. None of them are, not a one. They are all pursuing their own special interests, no one elses.

      As far as public be concerned, BUYER BEWARE.

      Most Particularly be beware of all Prophets, particularly those that find fault in everything and everybody that competes with or disagrees with their own narrow interests.

    2. LarrytheG Avatar

      I kind of thought it was the SCC that was supposed to represent the ratepayers, no?

      According to what I’ve read – the are supposed to be an independent agency that was created in the Constitution of Virginia – to represent Virginians in dealing with regulated companies.

      I’m still befuddled why anyone thinks the enviros are on a level field with companies like Dominion… who easily outspends the Sierra Club and others a hundred to one or so… The enviros make a lot of noise.. but they have pitiful funds to compete on a level money basis with their opposites.. in the General Assembly.

      And most enviro groups support consumer advocates.. and most industry groups and the GOP typically oppose consumer advocates..

      1. TooManyTaxes Avatar

        The Commission, itself, needs to make neutral judgments based on facts and law. The Commissioners should not be advocates for anyone. But there can be a reasonably small group of employees within state government that represent consumers in proceedings before the SCC, FCC & FERC.

        When I drafted revisions to the Iowa Code in the 1980s, I worked for a utility and worked with the then Commerce Commission’s general counsel to draft language that did not have an anti-utility bias, but rather, a pro consumer representation duty. It can be done.

  5. Steve Haner Avatar
    Steve Haner

    The Attorney General is the consumer advocate, by statute, and there is a team in the office dedicated to utility and other matters before the SCC. The Attorney General is also, however, an elected official subject to some of the same pressures as members of the legislature. My first real introduction to many of these issues came while working in the AG’s office – which, being I was under the same restrictions as the lawyers, I cannot discuss in detail. Reading the first story in the TD series really brought some of that back, but I was watching from a great distance.

    When then Deputy AG Bill Mims chaired the working group on the 2007 legislation, he clearly sought to protect consumers (but we all knew that the best we were going to get was a compromise that also gave many advantages to the utility.) In late 2012, then AG Cuccinelli really brought some pressure on the utility over some of those pro-utility concessions, and worked out his own bill (with no other stakeholders) to remove some of them. But the bill was at best two steps forward and two steps back, if not three steps back. It changed the accounting rules and rigged the 2013 rate review against consumers. It set the path for similar bills in 2014 and 2015.

    When it is allowed to work the process at the SCC is really interesting, as the various groups all have their say, cross examine each other’s witnesses, and form various alliances. It is fascinating that these issues have been largely absent from the AG race, but that’s another story….

    Discussions of a truly independent consumer advocate never seem to take off here in Virginia….

    1. I have brought up the billions in higher costs that will be paid by the ratepayers for the ACP to Attorney General Herring, when he was on a campaign stop in Staunton last fall. A few months later, I met with the attorney in charge of the AG’s Consumer Advocate group, along with attorneys from Southern Environmental Law Center, to discuss the impact of the pipeline on ratepayers.

      No public statement or action in SCC hearings has been undertaken by the Virginia Consumer Advocate’s Office on behalf of the ratepayers related to this issue so far. Maybe after the election.

  6. LarrytheG Avatar

    well.. here’s the Mission Statement of the Virginia SCC – and it does sound like they hear “all sides” and, at least in theory, try to balance interests..


    Mission Statement

    The State Corporation Commission will strive to apply law and regulation to balance the interests of citizens, businesses, and customers in regulating Virginia’s business and economic concerns and work continually to improve the regulatory and administrative processes.

    SCC’s Chief Goals

    • Carry out the duties prescribed by the Constitution and the laws enacted by the General Assembly of Virginia fully and to the best of its ability;

    • Ensure that all parties and persons who appear before the Commission receive due process of law;

    • Provide reliable information and assistance to Virginians in a consistent and high-quality fashion;

    • Provide assistance to Virginians who have valid disputes with regulated companies; and

    • Adopt rules and regulations that keep pace with legislative, business, economic, social and technological changes.

    but clearly – if Dominion does not get what it wants from the SCC – they will go directly to the GA to it – and do….

    I do not think the “enviros” for all the labeling of them as equal opportunity boogeymen have anywhere near the power and ability to go around the SCC and get the GA to do “green” things that both Dominion and ratepayers would oppose…

    It does appear to me the SCC was explicitly designed to be the arbiter of “balance” – realizing that to some extent what “balance” is – is in the eye of the beholder.. Also clear, that the GA can neuter them whenever they wish.

  7. djrippert Avatar

    Classic Virginia –

    When confronted with the possibility of losing some payola The Imperial Clown Show in Richmond just elbows out the regulatory body. See also: regulation of menhaden fishing in Virginia.

    When confronted with the choice of supporting either the citizen/taxpayers or the pocket liners the clowns side with the pocket liners.

    When confronted with citizens running out of patience with unending wealth transfers to Western Virginia the Clown Show invents new opaque ways of transferring money.

    Meanwhile, the utterly useless GA representatives from Northern Virginia orbit the Earth from a great distance peering at the little green planet trying to make out the rough boundaries of the state.

    1. TooManyTaxes Avatar

      “Meanwhile, the utterly useless GA representatives from Northern Virginia orbit the Earth from a great distance peering at the little green planet trying to make out the rough boundaries of the state.”

      How true! Whereas most senators and delegates from RoVA will tell you it’s their job to represent their districts, many NoVA representatives will say “I’m here to do the best for the entire state.” And most are fearful of the Post Editorial Board. In 90% of the time, the best thing to do for NoVA residents is vote against the Post editorials. Vile, dishonest and lazy people, they are.

  8. CleanAir&Water Avatar

    As someone whose job at IBM included helping VEPCO install their first computer a very long time ago, I read the article with interest. However, it seems this whole business was about power struggles, not about utility solutions and the future.

    What I would like to understand is how this threat of the Clean Power Plan got sold so well. Here is a conservative analysis that says there was no threat … see The Clean Power Plan and Beyond from Georgia Tech. (2015)

    “An Environmental Protection Agency plan to cut carbon pollution should actually save Virginia families money, if meeting the plan includes energy efficiency, according to two separate analyses. … research by Georgia Institute of Technology and Synapse Energy Economics finds it could actually cut utility bills by using conservation and renewable energy.

    Professor Marilyn Brown from the Georgia Tech School of Public Policy says efficiency and shifting to wind, solar and biomass should make a typical utility bill somewhat smaller. “We see a reduction of, depending on the state, anywhere from 5 to 10 percent rather than an increase,” she relates.

    Brown says business as usual would mean bills 9 percent higher by 2030.”

    Don’t the “clowns” read?

    1. Yes, they do read. But they read Dominion’s P&Ls and Balance Sheets. Currently, more energy efficiency and non-utility renewables costs Dominion money. They have the political power to obstruct more movement in this direction.

      We need to change the regulatory scheme so the shareholders interests are realigned with customers’ interests.

    2. TooManyTaxes Avatar

      “An Environmental Protection Agency plan to cut carbon pollution should actually save Virginia families money, if meeting the plan includes energy efficiency, according to two separate analyses. … research by Georgia Institute of Technology and Synapse Energy Economics finds it could actually cut utility bills by using conservation and renewable energy.”

      Who tested Professor Brown’s assumptions, conclusions and analysis? Who funded her work? Has Professor Brown made campaign contributions? And, if so, to whom?

      The staff for the MWCOG concluded it was unrealistic to assume there is enough money to retrofit all the older homes and businesses in the Greater Washington Area to make a significant reduction in greenhouse gases and related energy consumption. Who is right? Where will the funding come from? Or are the low- and moderate income residents going to see their energy bills skyrocket while those at the very top, including Facebook and Google, save money? Let’s dig deeply folks. And this is why I maintain the enviros do not represent the interests of the ratepayers. They certainly have a role to play, but not as the advocate for ordinary people and small businesses.

      1. LarrytheG Avatar

        re: ” Who tested Professor Brown’s assumptions, conclusions and analysis? Who funded her work? Has Professor Brown made campaign contributions? And, if so, to whom?”

        So an obvious question TMT is … WHO would you trust to do that in not those two? How many more do you need before you “trust”?

        one way to “trust” used to be – if a number of different scientists concur .. unless of course you think scientists are colluding in a conspiracy when it comes to issues like this…then that idea is out the window..

        so .. who would you trust?

        and if you trust no one – then what? just defend what we are doing now and oppose any/all changes because you do not trust any who say we should change?

        1. TooManyTaxes Avatar

          Larry, I have spent the last 40 years trying to find holes in other parties’ arguments and factual assertions. I also try to find holes in my client’s position before we present it. So do my opponents. It’s how we test witness/expert credibility, the evidence and the legal/policy arguments. It’s why parties can obtain discovery, cross-examine witnesses and file responsive arguments. It’s why judges and hearing examiners ask tough questions.

          Why should I (or anyone else, for that matter) simply trust Professor Brown or her research simply because she writes an article or submits a report? 50 million Frenchmen can’t be wrong.

          One often finds truth in part of a presentation or witness testimony, but errors in other parts. Sometimes conclusions cannot be drawn from the facts. And it’s very rare to find an expert testify or submit a report that hurts her/his client or cause.

          I’m not saying Professor Brown should be ignored. I’m saying her credibility and paper should be probed before accepting her conclusions. Same for Dominion. Same for the AG’s office – assuming it participates.

      2. CleanAir&Water Avatar

        First … “Who tested Professor Brown’s assumptions, conclusions and analysis? Who funded her work?” Valid questions … but check it out.
        In my remarks here this ‘enviro’ has tried to supply information that is based on factual material, not deliberately biased. While Dr. Brown is heavily invested in energy efficiency research, her background is in the industry as well.

        Funding for this research was provided by the Strategic Energy Institute at the Georgia Institute of Technology, for the competitively selected “Future of Electric Power in the South” (FEPS) project. Additional support was provided by two Professorships held by the principal author, funded by the Ivan Allen College and the Brook Byers Institute for Sustainable Systems at the Georgia Institute of Technology. Ms. Brown believes this funding “provided the latitude to pursue modeling of the Clean Power Plan unencumbered by any preferences that might come from external sources of funding.”

        Advisors who contributed to the analysis come from all sides and are listed.

        Second … “Where will the funding come from? Or are the low- and moderate income residents going to see their energy bills skyrocket while those at the very top, including Facebook and Google, save money. ”
        This ‘enviro’ believes we are the ones standing up for clean air and water, ie everyone’s health, and we are the ones who fight the siting of toxic processes in poor neighborhoods that don’t have the where-with-all to stand up and say “not here”.

        As far as skyrocketing bills … that just is no longer true and will be less and less so as on-site solar and battery prices come down dramatically in the next few years. Besides, we need to compare apples to apples. A new report by Oil Change International, Dirty Energy Dominance reveals that U.S. taxpayers continue to foot the bill for more than $20 billion in fossil fuel subsidies each year, 7 times larger than subsidies to renewable energy. The analysis outlines tax incentives, credits, low royalty rates, and other government measures benefiting the oil, gas, and coal sectors. It does not include environmental and health damage numbers many hope would be covered by a carbon tax. Those give-aways and exclusions distort any price comparison.

        Finally, do take a look at…… Officials from both sides of the aisle at every level of government have voiced strong support of PACE legislation and local PACE programs. PACE is a financing tool that helps accelerate private investments in a variety of local economic development projects. Results so far …
        $3.7 billion Residential financing completed
        $480 million Commercial financing completed

        This is private financing, loans that pay for the upfront fixes and allow the borrower to cut back enough on their utility bills and have more money in their pockets from day one. Arlington is moving ahead, but the way Virginia’s law was written has made using this financing method more difficult than need be … both from ignorance and design combined.

        Demand is not rising and will go down as more and more efficiency buildings are retrofitted and more and more people and companies choose to generate, and save some, energy on site. The gird will be cheaper and more resilient as well as cleaner.

  9. CleanAir&Water Avatar

    I agree that Virginia must change the regulatory structure, or do an end run around Dominion with readily available PACE loans, but that too is all about power.

    This isn’t the personal power fights of the article, but accumulated corporate power that refuses to consider what is the the best way to Virginia’s energy future and only seems able to react when challenged by such as Facebook or Amazon.

  10. LarrytheG Avatar

    well, you don’t really have to retrofit to use less energy – and using less energy means less pollution and lower greenhouse gas emissions.

    When you replace a furnace or a thermostat or many appliances..or siding… most folks look for replacements that are more efficient and less consumptive.

    Add to that – the people who will build new or.. some number that WILL retrofit and you get – just like you do with more efficient autos – less energy use, less pollution, less greenhouse gases..

    the CPP was basically a statement of what was going to happen anyhow.. not some nefarious green weenie conspiracy.

    Killin the CPP won’t change hardly anything – because people typically want to use less energy – pass less for energy and they will when they can. Some will only be able to buy more efficient appliances or a smart thermostat – others will replace furnaces and heat pumps when they break.. etc..

    and again – when you use less energy – you generate less pollution -and that includes carbon pollution.

    Even folks who are vehemently opposed to the CPP – like to use and pay for less energy… they just don’t see the two as related.

  11. We can wring our hands and decry how politicized our regulatory systems have become, how corrupt our government is at all levels. But will our hand wringing alter things? I doubt it.

    In our complex world of urgency and stress, we want someone else to deal with all of this; to save us from responsibility of having to think deeply about what we truly want and taking action to manifest it.

    To distract us, the hidden powers set us against one another. Blood-sport in the circus; the heretics against the lions. We rage against the other, silently giving thanks that we were not the one who has been selected.

    A divided populace is too distracted by the spectacle to pay attention to what is happening behind the scenes.

    Things change when an engaged citizenry says “that’s enough!”

    We have no one to blame for our current predicament other than ourselves. People usually get the government they deserve.

    We don’t have to share the same opinions, only a desire for a fair process that balances the varied interests.

    We have an election soon. Regardless of your party, how about writing to the candidates that you support and ask them to do the right thing. Ask them to make an effort to reveal all of the facts relating to our energy situation. Tell them to examine the path we are on, who it benefits and who it doesn’t. The truth can set us free.

    We don’t have to pick a winner or a loser. We can use our collective abilities to chart a third course that benefits us all to one degree or another. That is how a community, a state or a nation moves forward.

    1. Would that your challenge were a simple one. “Things change when an engaged citizenry says ‘that’s enough!’” — true — but it took decades of abuse by the railroads, books by Sinclair Lewis, and the reformist zeal of the pre-depression Progressive era, finally to push State legislatures (and Congress) to delegate to a specialized utility regulatory body the bulk of most States’ electric rates and services regulatory process. In Virginia, this was through creation of the SCC by a constitutional provision in 1902 as the independent public service company regulator. However, a recent VA Supreme Court decision essentially holds that the 1971 constitution undid that independence (by accident?). The SCC continues to go through the motions but the real action, the final say (or silence) is over at the GA.

  12. Re: the cost comparison of the Va. Hybrid Energy Center ($1.8-Bil for 600 MW) vs. the New Brunswick Nat Gas Plant ($1.0-Bil for 1358 MW) needs to be taken in context. When the Coal was King, it was not because plant construction was cheaper, it was because the *predicted* fuel cost of natural gas was widely expected to sky-rocket…which proved to be the exact opposite of what really happened. I always thought nat gas was cheaper, which it was, but there was no way to argue against somebody’s inaccurate crystal ball.

    1. LarrytheG Avatar

      Re: the cost of gas. I swear.. I remember a time when gas was used to fuel “peaker” plants AND that it was so expensive – 7 times more expensive than coal that there was a big effort to switch to “smart meters” that would charge more for electricity at peak hour when that gas was being burned.

      Now that frack gas is so plentiful and cheap – “smart meters” have pretty much gone away as something we need to do..

  13. LarrytheG Avatar

    re: politics , division and how govt “works”.

    Most folks are wholly ignorant of how fundamental things like health care or transportation, or education or the electric grid “works” – much less the govt role in it.

    And when I say “ignorant” I fully include myself – most all of us are ignorant- just on different things – we might know some things but others we do not – and typically it includes a lot of things in our everyday lives that are governed… to keep them functioning … like the electric grid.

    Add in today’s rampant distrust and cynicism – a willingness to view govt as something that needs to be neutered, rolled back.. like the CPP.

    The CPP was/is the electric grid equivalent of the govt’s earlier policy on corporate average fuel economy (CAFE) which has given us cars dramatically less polluting and so highly efficient that they’re affecting the supply/demand of oil – as well as undermining the gas tax’s ability to pay for roads..

    That came from govt – not the private sector and not “less govt” politics.

    Electricity innovation and efficiency won’t change overnight – the CAFE rules did not change the fuel efficiency of cars overnight -but it DID CHANGE IT and the CPP would have had a similar effect – over time –
    had it not been turned into an ignorant political piñata with “help” from the same type of opponents who fought against CAFE and the removal of lead from fuel.. Today, that mindset continues..with folks now claiming that solar “harms” the electric grid.. “mars” the scenery, etc…

    Some day -sooner than some will expect – solar will seamlessly integrate .. we won’t even notice it.. anymore than we do guardrails on roads or storm water ponds behind businesses or scanners at store checkouts.

    We always seem to have a good supply of folks who oppose change.. and today with the 24/7 news cycle and the internet.. that opposition can and does have much more impact than before… no question.

    You’d think that most folks would WANT less pollution – especially if we think it is harmful to us both short and long term AND less costly energy but nope.. today, it’s a nefarious govt scheme!!!

    TODAY – if the CAFE was attempted .. it would fail..just like the CPP in fact, there ARE those TODAY who want to roll CAFE back..!! same folks who thought taking lead out of gasoline was an unwarranted intrusion of govt – in the free market , job-killing regulation.. govt at it’s worst!

    Today – the boo-bird naysayers are in charge.. no question – the internet has given them voice and those who support things like CAFE and CPP remain muted.

    1. TooManyTaxes Avatar

      Larry, the difference between the CAFE Standards and the CPP is the former is specifically authorized by Congress through the Energy Policy and Conservation Act of 1975 and the Energy Independence and Security Act of 2007. Quibble with the specific rules adopted by the bureaucracy, but there is no question the federal government is authorized to adopt fuel efficiency for motor vehicles.

      On the other hand, there is no specific law passed by Congress that authorizes the CPP and a complete restructure of the electric power industry. Such a major undertaking should not occur unless Congress passes and the President signs a specific law to do so. Otherwise we are well on the road to a Soviet-style dictatorship. And as the enviros and lefties are learning, what one president can do by pend can be undone by the next president’s pen. We cannot live in freedom and security if we allow the ends to justify the means in the federal government.

      1. Rowinguy1 Avatar

        TMT, I have to disagree. The Clean Air Act requires the EPA to regulate hazardous air pollutants. When the EPA determined CO2 to be such a substance, it was obligated to regulate. The US Supreme Court directed the Bush administration EPA to develop such regulation, but the effort only really got underway after Obama was elected. I believe the decision was Masssachusetts v. United States of America, but I could be mis-remembering.

        What most opponents of the CPP decried was the initial proposed rule that emanated from the Obama Administration, that, as you note, sought to reform the entire electric industry (by creatively reading a very little used portion of the Act), as opposed to determining ways to make individual generation units cleaner. The “outside the fence” approach would have required, among other things, the existing fleet of fossil fuel generators run more cleanly than comparable “new sources.” The proposed rule would have imposed significant compliance costs on Virginia utilities, failed to recognize the substantial improvement in CO2 emissions that had already taken place here, and imposed additional penalties because the Commonwealth “imported” a good quantity of the electricity consumed here.

        The final rule rectified many of the initial proposal’s flaws and would have been a very light lift to comply with.

        No one should assume, however, that carbon dioxide regulation is going away. Even the Pruitt EPA will have to develop its own regulations, should it last that long.

  14. LarrytheG Avatar

    TMT – you are essentially correct but the CPP was based on a Court decision that gave the EPA the right to regulate greenhouse gases as pollutants and the CPP did not stipulate what to do – just the goal – and let the industry decide (like they did with CAFE) how to meet the goal.

    Keep in mind that when CAFE originally passed – it did have bipartisan support – from the GOP and the EPA itself was created by a GOP POTUS and today there is no way to pass virtually ANY law whether its the CPP, or immigration or health care.. infrastructure -you name it.

    If CAFE were up for a vote again – 90+% of the GOP would vote to repeal it as well as the EPA itself.

    But as several have pointed out – the goals of the CPP will be achieved anyhow because of the use of gas, solar and the rapid advance of demand-side technologies.

    But I’ll accede to your point – and actually agree that EOs – back then – and now are acts of desperation – that will not survive like a law might.

    1. TooManyTaxes Avatar

      “the goals of the CPP will be achieved anyhow because of the use of gas, solar and the rapid advance of demand-side technologies.”

      I generally agree that leaps in technology will greatly increase the use of gas and solar. The market will cause the phase-out of coal. As to changes on the demand side, I am not so convinced. Income growth in the United States is not sufficient to allow the vast majority of people to upgrade their homes (and most smaller commercial buildings) to reduce energy consumption drastically.

      1. LarrytheG Avatar

        re: upgrades…

        TMT – whenever something like a heat pump or water heater breaks, it will have to be replaced.. and the replacement will be more efficient. New homes and apartments will contain more efficient equipment…

        You’ must be thinking about items with big upfront costs that are discretionary and I’m thinking more about things that are mandatory – and you pick the more efficient when replacing or building new.

        Programmable / smartphone controllable thermostats are cheap enough for many and going to make huge differences in the way people heat and cool their homes when they are away from them. LED lights and TVs.

        The irony is that the price of electricity drives the pace of adopting technology – when electricity is expensive – people are motivated to upgrade ..when it’s cheap – they put it off.

        The more gas we use and the more we incorporate solar – it ought to tamp down the price of electricity… in theory… although Dominion seems to have convinced the GA that they need “more” profit.

        1. TooManyTaxes Avatar

          Larry, you are certainly correct about replacing heating and cooling systems with more efficient ones when the former breakdown or just die.

          MWCOG staff indicated that the key factor to reduce residential energy consumption and related greenhouse gas emissions was to replace doors and windows as well as insulate the homes and smaller commercial buildings. The cost is unaffordable, according to the presentation.

          1. The real payoffs in energy efficiency are with deep energy retrofits in commercial and institutional buildings. These provide cost savings far beyond the nibbling at the edges type of activities typically undertaken by utilities or government programs.

            The huge cost savings (from hundreds of thousands to millions of dollars per year) accrue because much smaller HVAC systems (or none at all) can replace the large inefficient ones in use today, as well as much smaller pumps and motors.

            This is another example of where a changing mindset leads to superior results.

          2. TooManyTaxes Avatar

            Tom – “The real payoffs in energy efficiency are with deep energy retrofits in commercial and institutional buildings.”

            No doubt about it. But what will also occur is the lower and mid-income people simply don’t have the economic wherewithal to do their own deep energy retrofits? And what about small businesses? I don’t see the government stepping in with the level of funding it would take to do this.

            Then the bulk of the energy suppliers’ costs are going to be recovered in the bills sent to these same people. Dominion and any other generators and/or suppliers are going to recover their costs. And demand for basic levels of electric power and heat is pretty inelastic.

            Someone needs to represent consumers.

          3. TMT,

            You are right. The big projects will probably be funded by the energy service companies for no money down.

            Smaller businesses and residences are not as good a credit risk and will be asked to pay up front. Much of this group will not have the extra capital needed to fund the efficiency projects or self-generation from solar that will actually save them money.

            The higher energy costs produced by the pipeline, rising natural gas prices, unnecessary construction of new power plants and pumped storage projects, will fall disproportionately on low- to mid-income customers. Electricity bills comprise a much higher percentage of their income than for others.

            And usage is largely inelastic for them because during extreme weather, the need for energy can become more of a survival issue than merely for comfort.

            If we continue on our current path, access to affordable energy could become more of a social justice issue that taxpayers might be asked to solve. Avoiding this is one of the reasons I am suggesting that we reorient our energy system so that energy prices remain reasonable and more long-term jobs are created through energy-efficiency and new energy technologies. The projects currently proposed will raise our energy prices, reducing job creation beyond the few months it takes to construct the project.

          4. TooManyTaxes Avatar

            Tom – I’d sleep a lot better if the AG’s office was actively challenging proposals by both Dominion and other interest groups.

            We heard a lot from the smart growth and environmental groups that a hugely dense Tysons was going to reduce traffic, pollution and greenhouse gas emissions. Those of us who live near Tysons were informed we were getting the greatest thing since sliced bread.

            A number of community groups, including the McLean Citizens Association, the Town of Vienna, the Providence District Council and the Hunter Mill Defense League, worked together through the auspices of the Greater Tysons Citizens Association, to challenge the developers, county staff, smart growth and environmentalists in order to protect the interests of Tysons’ neighbors. What resulted in the Spring of 2010 was a reasonable compromise that everyone could support, albeit with some expressed concerns.

            Next we challenged the proposed transportation funding and were able to shift $400 million plus over 40 years from taxpayers to Tysons landowners and residents.

            Virginia needs a similar entity to challenge Dominion, the environmental groups and other stakeholders for the energy restructure debate. The promises of Tysons Utopia were false in many respects. I strongly believe the promises of renewable energy Utopia and total retrofitting energy savings for all will likewise be false in many respects. Someone needs to represent consumers.

          5. Reed Fawell 3rd Avatar
            Reed Fawell 3rd

            TooManyTaxes –

            You are right about the crying need for someone to effectively and with integrity represent the public interest. But where can these people of integrity be found today? And how can we give them the tools and clout to do their jobs effectively, thus overcome our cultural sewer?

          6. TMT,

            When I first spoke to the AG’s Consumer Advocate, he thought that what I was saying was just an anti-pipeline ploy. I have written the AG’s office again since that meeting making it clear that I am speaking up because I am concerned about both the long-term health of Virginia’s economy and the financial well-being of our utilities (not their parent companies).

            They might be more on-board now, but it appears that everyone is cautious about speaking up about the pipeline before the election. I suspect they are waiting to see if they still have a job or not.

            There is growing awareness that the study Dominion has used to pitch the benefits of the pipeline is fundamentally flawed. Adding in the cost of using the pipeline results in higher energy costs from the ACP, not lower costs, as widely advertised. Higher energy costs will not create more jobs.

            Soon, you might see a greater role being played by the AG’s office to protect consumers from the Dominion projects that will serve shareholders at the ratepayers’ expense.

            Dominion will probably continue to favor solar because their corporate customers want it and it is cheaper than conventional alternatives.

            Trump could slow this down a bit if he orders a stiff tariff on imported solar panels that would favor the oil and gas industry while the solar tax credits expire.

  15. Well said, TomH. I blame Dominion for deliberately undermining the SCC. Maybe DOM thought it could control the GA easier than the SCC, but the GA’s price was to inject a high degree of politics into the very utility regulatory process the Constitution of 1902 (which created the SCC) was designed to de-politicize.

    DOM’s tactics have effectively reduced the SCC from a Constitutional court to a legislative subcommittee; those tactics have transformed the formulation of Virginia energy policy from a deliberate and transparent hearing process focused on expert testimony and a long view of the public interest, supported by predictable and dull cost-of-service ratemaking, to an opaque and highly political process focused on keeping Wall Street and key legislators happy. The current retail ratemaking process replaces regulatory risk with a negotiation, premised on the gamble that Dominion’s executives can predict the future more accurately than the GA. It adds the probability that no one will identify, much less prevent Dominion from taking, actions contrary to ratepayers’ long term best interests for short term revenue advantage. Both the rewards and the risks for shareholders are greater this way; but given the many fundamental changes in the electric industry these days, the chances are that the risks will prove to be greater than the rewards. Who, then, will speak for the ratepayers?

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