Dominion’s Base Rates Like Cable You Can’t Cancel

By Steve Haner

The 2020 effort to bring Dominion Energy Virginia back under full State Corporation Commission regulation failed because too many of the loudest advocates are two-faced hypocrites. If they truly cared about ratepayers and the proper balance in utility regulation, they wouldn’t be pushing that other bill, the one that further guts the SCC and adds substantial customer costs in the name of green virtue.

During the hearing Monday night State Sen. Steve Newman, R-Bedford, was quite open in chastising the various environmental advocates for talking out of both sides of their mouths, worrying about the ratepayer in one discussion but not the other. He was right. If you want Virginia energy regulation done correctly, it needs to be done correctly in all instances. 

Newman has been consistent.  He voted for the failed House Bill 1132, which would have returned some fairness to the 2021 review of Dominion’s earnings and rates. He has also been voting against the Virginia Clean Economy Act, with its massive mandates for new wind and solar power without SCC oversight. The outcome on that bill is still in doubt, but some version is likely to pass.

Watching Monday’s discussion before the rate case bill failed on an 8-7 bipartisan vote was painful because the case for the bill was not made very well. Frankly, if you are trying to make your case at the committee microphone at the end of the game, you’ve already lost. The following analogy should be easy for the average Virginian to understand, even legislators.

Think of Dominion’s base rates, about half the typical monthly bill, as comparable to basic cable TV. The various rate adjustment clause “adders” which have been piled on over the past decade, to where they are now a huge part of the bill? Think of them like the various streaming services.

Twenty years ago, basic cable was great. You got it all -– movies, some channels commercial free, a wide variety of sports including the blockbuster events, other specialty programming, and for a while a wide array of on-demand re-runs with no additional charge required. Boy, has all that disappeared.

Now the good stuff is all on some streaming service, not included in cable. You can’t even get Turner Classic Movies without a specialty package. The falsely named public media people have joined the greed parade, charging for on-demand re-runs if you missed the original broadcasts. CBS has led the way into pay TV through streaming. No Sunday “Disney Night” on free NBC ever again.

That’s what those Dominion rate riders are like. Each and every one, each and every one, pays for something that used to be included in base rates and still could be. Not that long ago you would not have paid extra for construction of a new natural gas generator or would not have been hit with a separate charge for various energy conservation programs, for environmental compliance or to bury some neighborhood distribution lines.

Pre-2007, those functions were built into base rates. You are still paying the base rates set when they were.

But as all those functions and investments have migrated over to the individual rider charges (the streaming services), the base rates have stayed the same. You are paying for things you no longer get, just like with cable TV. It was clear in 2007, when this new regulatory structure was created, that the base rates needed a top-to-bottom accounting and possible downward adjustment. Since 2007 the number one goal of Dominion has been to prevent that, and Monday night the company succeeded in preventing it again. The financial reward to them has only grown since 2007.

In 2009, to prevent the SCC from lowering base rates in the first case after the 2007 legislation, Dominion paid out $725 million in cash rebates to customers. It if paid out $725 million, how much more money did it hold back? How much more did it see coming down the pike? It has gained billions in excess profits since then, easily. The payoff paid big dividends.

There is one big difference between your new multi-faceted electric bill and your now equally complicated television bill. With the television service, you have choice. Million and millions of Americans have dumped the greedy basic cable operators, who offer far less content than they used to for the same cost. The average Virginian cannot dump Dominion and is locked into paying for the now-shrinking benefits of the base rates plus paying for all the new rate riders.

If the General Assembly passed a bill to mandate that everybody keep paying a monthly cable bill, and forcing them to also pay for Netflix, Prime and Hulu, do you think there might be a political backlash? Well, that is what the legislature has done routinely, in 2013, 2014, 2015, 2018 and is about to do again in 2020 on behalf of Dominion and its shareholders.

Two small examples: There is a rider on everybody’s Dominion bill to pay for this residential under-grounding program, which Bacon’s Rebellion has visited before. If it succeeds in lowering future repair and maintenance costs, Dominion pockets all that gain through base rates. Our dollars improve their sales and net profits, unless base rates are routinely adjusted. Oh, and they get a profit on the underground installation program, too.

This new program to help low-income customers with their bills, the Percentage of Income Payment Plan, will work the same way. The base rates have always included an allowance of millions of dollars for uncollectable accounts. To the extent PIPP gets some of those customers current (with our dollars), all of that allowance built into the base rate flows right to Dominion’s bottom line. The only way to back it out would be to have the kind of base rate true up contemplated in that failed bill.

It’s dead. Eight senators killed it, despite 77 votes in favor in the House.  The Republicans who voted to kill it are  on their own.  The Democrats who voted against it will have their political keisters protected by subsequent votes in favor of the big green energy package and some of its satellite bills, equally dismissive of proper utility regulation for prudent and reasonable costs. The environmentalists will forgive and forget.

If the first effort – a return to proper regulation – was their real goal, it should have been the only effort.

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15 responses to “Dominion’s Base Rates Like Cable You Can’t Cancel

  1. good article… yep uber hypocrisy -……. following.

  2. Really good post

  3. Six of the eight killers of the bill were Democrats. They do the same thing to legislation that would lower the cost of healthcare. The party of Jefferson is now the party of the monopolists. I will publish their donor information tomorrow.

  4. Excellent writing job.

  5. That is a great way of describing the situation. It is so simple that even I understand it. Really, I have just become generally aware of the whole rate regulation mess and this analogy has greatly clarified it for me. Now, someone representing the rate payers (who?) needs to hire you as its spokesman/lobbyist.

  6. But just to make clear. This has been going on for a long time. It did not just start when the Dems became the majority.

    We should rightly hold the Dems responsible for their feckless behavior but we should also acknowledge that something that has been going on this long, may not be easily undone in one session.

    DJ, who both comments and writes articles in BR, has pointed out over and over just how awful Virginia’s approach to corruption is and if this issue is actually due, in part or wholly, to the unfettered flow of money in the GA, there is much more than mere “hypocrisy”going on.

    We apparently all waited and expected the Dems to fix something that had been going on for a long time in the GOP-controlled GA and when they did and nothing changed, “we” were all “shocked” – regardless of our political leanings.

    The question now is – do we walk away shaking heads or what?

    • Yes, the underlying problem is that big money can corrupt the process, and now has. I’ve said for two years of writing about this that both parties are at fault, and now that’s clear. The SCC was created to end the corruption that dominated the early 20th century, but we are back where we began. The people behind this VCEA are also giant corporations seeking profits, happy to gut the SCC’s authority to enrich their stockholders. A plague on all their houses (not a message that works for lobbying, Dick.)

      I put out a tweet about this last night, and it was quickly “liked” by the editor of VA Mercury, but he won’t run this or link to it, watch. It won’t get in the VPAP clips, watch. The RTD might run a column from me on this, but they’ll get calls from you know who….The corruption was on display when the prez of the Va Chamber of Commerce came down Monday like a loyal retainer to testify against this bill. And the real display of corruption was the people not in the room, not standing up for their own interests (because their parochial interests have been accommodated.) What can we do? Put your faith in the Golden Rule of the Legislative Process: What goes around comes around.

  7. How much does ALEC have to do with neutering the SCC?

    One of the problems is that the average voter knows little of ALEC nor the SCC.

    All of this stuff takes place under the radar of much of the public.

    • Zero. What ALEC does is create model legislation used all over the country. There is no ALEC model legislation on this. No other state, none, zip, zero, has an electricity regulatory process this completely corrupted. You haven’t even seen another state where any legislator or utility was shameless enough to propose it. Now, Dominion has taken steps in South Carolina in this direction, and Duke Power played some games with its grid mod effort in North Carolina. But those are weak copies of the main strain of infection here in VA (gee, sounding like DJ….) Please provide photo if you’ve ever seen Dick Saslaw at ALEC…..

  8. so what is done in Virginia would not be a desired corporate “model” for other ambitious utilities to emulate? 😉

    I note that Dominion is also in other northern states, Ohio? and presumably under a very different regulatory regime?

    It’s not just the SCC – it’s the law and regulation that the SCC would follow and implement. Essentially, correct if wrong, what’s effectively neutered the SCC is not their specific role but carve-out legislative that cuts them out of being involved in some approved legislation.

    Both McAuliffe and Northam would have had to NOT veto such legislation or to put another way – if they HAD vetoed – it would
    have made news and elevate the issue to the general public as well
    as the votes of the legislators.

    I’m surprised that we have no effective consumer advocate organizations in Virginia and no, I do not consider the “green” folks to be consumer advocates – they’ve now proven they are not. It’s a separate job and has little to do with “green” stuff – it has to do with insuring that consumers are not abused by businesses.

    The one thing that we hear over and over – is that all these alleged “abuses” must not be real because Virginia has some of the lowest priced energy in the nation – ipso facto.

  9. Of course, I was not surprised by Saslaw’s vote. Say what you will about him, he has been consistent in his support of Dominion. Although many of her constituents will be hurt the worst by higher electric rates, I was not really surprised by Lucas’s vote. She has always struck me as someone who will go where the money is. I was surprised by the votes of Spruill and Marsden.

  10. Great article. The cable company analogy was excellent. Here are the 5 states where state campaign contributions are unlimited:

    1. Alabama
    2. Nebraska
    3. Oregon (go figure?)
    4. Utah
    5. Virginia

    Oregon has a deregulated electricity market so maybe simple competition keeps the electric companies in line.

    Here is a very interesting article from The New Republic last October with a very heavy emphasis on Virginia ….

  11. I am watching AEP CEO on Cramer, Cramer asks what happens to utility profits if businesses slow down due to COVID-19 and people stay home? The CEO says utilities will rake up because we make our biggest profits margins off the homeowners. Sheesh tell me something I don’t know (that’s a question Chris Matthews normally asks).

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