The following updates three pieces of legislation previous featured on Bacon’s Rebellion. Each headline links to the previous posts for background.
SCC Review of Customer Pipeline Costs
Two legislators flipped their votes from subcommittee and voted no in the full House Commerce and Labor Committee, but legislation to reinforce State Corporation Commission authority to review the costs of natural gas pipelines survived on an 11-8 vote.
Delegate Israel O’Quinn, R-Bristol, and Margaret Ransone, R-Northern Neck, had supported House Bill 1718 but reversed themselves in the full committee vote Thursday afternoon. Ransone complained that she was now confused about the impact of the bill. Even more curious, new House Minority Leader Eileen Filler-Corn, D-Springfield, abstained, which normally indicates a financial conflict of interest.
I guess a vote against any generous campaign donor with a long memory counts as a conflict of interest, right? For Democrats happy to posture against the utility and its controversial Atlantic Coast Pipeline, this is a big Moment of Truth.
The bill must pass the full House by Tuesday to move to the Senate. There is no similar Senate bill coming the other way. Dominion Energy Virginia continued to voice its opposition, even though the full committee usually does not debate bills heard in subcommittee. Dominion lobbyist Jack Rust was joined in opposition by Washington Gas lobbyist W. Scott McGeary.
If the pipeline is finished and used to transport gas to Dominion power plants, as expected, the SCC will then review the price that Dominion wants to pass along to its customers for their share of the construction costs and profits. Dominion argues the SCC authority to rule is sufficient. The bill requires the SCC to address three key questions, questions which you would think Dominion would be happy to answer, They are especially important because both the pipeline and utility are owned by the same corporate parent, so this is hardly an arms-length transaction.
At the time the decision to contract for gas from the pipeline was made, did the utility need the gas? Were other alternative sources considered and weighed? Did the utility decide on a reasonable basis that the contract was the lowest cost long term option for supplying natural gas? Eight Republican legislators have cast votes against requiring answers to those questions before we pay for the pipeline. Let’s see who else does.
Original Cost Assessment of Machinery and Tools
Also still in doubt is a key local tax reform measure important to Virginia’s manufacturing sector. A 5-3 vote in subcommittee for House Bill 2640 became a 14-8 vote in the full House Finance Committee. There is no partisan pattern in the vote; rather it reflects sensitivity to another powerful lobbying interest in the legislature, local governments.
The question is whether the reference in state law to original cost as a method to assess the value of machinery and tools refers to the cost paid by that company, or a higher price paid by a previous owner of used equipment. The assessed value drives the amount of tax. The bill grows out of a Hanover County tax dispute over a dying paper mill where the Supreme Court of Virginia allowed the higher assessment. The bill would require the county recognize the price paid by that taxpayer.
The bill should have already been acted on, but patron Kathy Byron has taken the bill by for the day several times. Tactically such delays tend to favor the opposition, unless it means additional language is being prepared to defuse opposition.
Again, a no vote sends a clear message of support for local tax collectors, and unconcern for business complaints about a heavy tax on capital investments. The local government hole card is a threat that a failure to squeeze all the M&T tax possible out of business would force higher taxes on private homes.
Exits to Retail Competition Remain as Bill Amended
Thursday’s House Commerce and Labor Committee also approved a substitute version of House Bill 2477, narrowing the focus to only large retail customers of Appalachian Power Company. The original bill was statewide and would also have effectively ended retail competition for large loads on Dominion.
The much simpler revised bill imposes some additional costs on APCo customers who depart for third-party generation in the future. APCo has a different business relationship with the regional transmission organization PJM and complained that the loss of a large customer left it stuck with certain expenses another PJM member might not face. Those additional costs will reduce the incentive to seek another supplier.
Any future customer leaving “shall continue to pay its incumbent electric utility for the non-fuel generation capacity and transmission related costs incurred by the incumbent electric utility in order to meet the customer’s capacity obligations.” The substitute reduces from five to three years the notice such a customer must give before returning to the system, although that delay is up to the utility and it might welcome the customer back.
Also continuing to advance is the large customer-related bill sought by APCo, and in this case fully inclusive of Dominion, to allow a general customer rate adjustment clause to pay for new (and speculative) transmission lines to unused industrial locations. The committee killed several other bills that would have allowed large and small customers an easier choice of supplier, protecting the monopolies of both major utilities.
