With Friends Like These, Ratepayers in Big Trouble

By Steve Haner

If your main concern is that people pay a fair price for electricity, the best outcome of Monday’s Senate Commerce and Labor Committee meeting would be approval of the bill changing the rules on Dominion Energy Virginia’s 2021 rate review, followed by defeat or delay of the highly touted Virginia Clean Energy Act. That is also the outcome which preserves the independent authority of the State Corporation Commission.

Looks like it will be the other way around. 

News broke late on Friday that the first, House Bill 1132, is not even on the docket for Monday’s meeting of the committee, despite it passing the House with a strong bipartisan vote. Committee Chair Richard Saslaw, D-Fairfax, sets the docket and he must be acting at the utility’s behest. The Twitterverse is alive with commentary and derision today.

Much of it is coming from the advocates for that other bill, House Bill 1526, which is on the docket and is expected to gain approval Monday. There may be some amendments to it, as yet unknown outside a secret circle, but it won’t change much.

The sins against the people of Virginia that the first bill seeks to correct are compounded and worsened by the second. It is just as dismissive of the SCC’s independent role. This year’s intrusion by the General Assembly into politically driven central energy planning is no different than its previous assaults on utility ratepayers in 2014, 2015 and 2018.

People who think themselves smarter than the rest of us will take our money through higher rates and spend it how they want to, often to satisfy political supporters. Utility stockholders remain protected. Electricity rates have merely become yet another form of hidden tax. The provisions in this new bill to means test the impact of those higher “taxes” on low income customers just prove the point.

Saslaw has a keen eye for hypocrisy, and the smart folks at Dominion know that forced to choose between the two bills, Democrats will sacrifice the rate case bill. The Climate Catastrophe hysteria is too central to their political message, its adherents and beneficiaries providing too much manpower and money. In 2018 Dominion tapped into that to push through the Ratepayer Bill Transformation Act, with many of the same environmental groups lined up to cheer its promise to build more non-fossil generation.

If you have an hour, Blue Virginia posted a recording of a long conference call among the proponents of that bill. At least read the accompanying summary if you lack time for the recording. They spent a fair amount of time congratulating themselves for diminishing the influence of Dominion. That was Thursday night, and Friday this news broke. Maybe they spoke prematurely. Maybe they have Dominion right where the utility wants them.

Should both bills pass, and if the 2021 SCC rate review then does result in lower base rates (it should), that would simply set a new floor for the coming cost explosion under the Virginia Clean Economy Act. It is hard to get excited about that, frankly. It’s a political fig leaf at best, one step forward followed by two steps back.

As the commentary on the audio makes clear, this tinkering with the minutia of energy regulation will continue into future years. They are coming after the rest of the economy next, including transportation, agriculture and the use of natural gas for home heating and industry. Here is Del. Richard Sullivan, D-Arlington, patron of the House version of the Clean Energy bill, quoted on Blue Virginia:

“…we will be back if there are things we don’t get in this bill, that we want to continue work on; we can come back next year. There’s certainly nothing in the bill that says this is now set in stone for the next 30 yearsNone of us know what kind of technology might exist five to ten years from now…We will have an annual possibility to come back and now tweak or even make major changes to the bill.”

Late last year, I bumped into an SCC official I know in a grocery store. During the conversation I noted that I’d slowed down writing about these issues here on Bacon’s Rebellion. “Well, its always the same story,” was the response. Indeed, once politicians decide the end justifies the means, it is always the same story. Here it is happening again.

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19 responses to “With Friends Like These, Ratepayers in Big Trouble

  1. Your commentary is usually top notch, not always, but often and this is a good one though as usual your ying is not my yang.

    All of this screwing over of ratepayers has gone on for years, starting with the “failed” deregulation, then following with overcharging which they were allowed to keep, then they also were allowed to keep the tax rebates then they were “forced” to clean up the coal ash – but getting their usual profit cut.

    Not much caterwauling about the GOP majority and those actions back then,yes I know some Dems were also culpable but the majority did prevail on whacking on the ratepayers and disemboweling of the SCC.

    Now, oh my GAWD, the Dems are doing something similar. OUTRAGE!

    maybe justified. The prior bad acts were crony capitalism to primarily benefit Dominion and it’s investors, the latter bad acts were to try to promote”green” with attendant crony capitalism – both at expense to ratepayers.

    I guess, depending on one’s point of view – plain old Crony Capitalism GOP-style is preferable to Dems Green Crony Capitalism?

    😉

    • Your blind partisan sycophancy has the discouraging impact you seek, but despite it I will slog on a bit longer. What little you know about any of this you learned here on Bacon’s Rebellion. I have never let the GOP members off the hook for the prior bad bills, but you are happy to insinuate that I have, knowing full well that is false. Every regular reader knows that is false.

      • Let me make clear. What I refer to is what I DO KNOW in my reading beyond just your efforts. I just point out that there was very little from anyone about the deeds of the GOP with regard to Dominion and NOW, it seems like there is a cacophony of alarm about what the Dems are doing and it seems to me, primarily because they want to push GREEN and they’re willing to play the Crony Capitalism game to get it, so they’re TWICE “terrible”!

        So my view is the Dems don’t have any high(er) standards with regard to Crony Capitalism – but perhaps their motivations to engage in it – extend beyond just supporting corporations and their stakeholders.

        I realize that this is my own point of view – I espouse it, yes.

        And no, I do NOT think the Dems are the greatest thing since sliced bread – AT ALL – they’re just as bad as the GOP on the crony capitalism – no question what so ever.

        But I’m NOT whacking on you personally, and if it feels like it, then I apologize and would never want to see you discontinue your efforts here.

      • 100% agree Steve Haner.

      • Steve-

        With regard to your comment “Your blind partisan sycophancy has the discouraging impact you seek, but despite it I will slog on a bit longer.”

        Please learn to ignore Larry as others here have learned to do. Please by all means keep doing your fantastic work. It can’t be replaced, is thoroughly original and nothing less than a great and unique public service dearly needed. I do not exaggerate here.

  2. Dominion Energy gave $335,000 (vpap.org) in donations in 2019 to the House Democratic Caucus, Virginia Legislative Black Caucus and Virginia Senate Democratic Caucus, the top three recipients of its largess. Saslaw received $60,000 from Dominion in 2019, trailing only Louise Lucas in the named direct beneficiaries of its donations. Over his career Saslaw’s biggest donor by far has been Dominion Energy – $410,508. Dominion must think he is an excellent legislator. The truth: this is not personal for Saslaw, just business, as it is for Dominion.

    • Indeed – this is not an anomaly , most corporate rent-seekers will focus on the party in power… no magic there – AND no shortage of willing players, Dem or GOP.

      No one said the Dems don’t play this game. They do, but their motivations and desired end product are sometimes different, and they rely on regulations and not the unfettered market to affect issues – but in the case of Dominion, it’s the proverbial 600lb gorilla than not too many Dems are willing to fall on their sword for – either.

  3. Virginia’s hospitals are the 6000 pound gorilla. Home team advantage in every district in the state.

  4. Well, I suppose we can console ourselves that Dominion Energy customers in Virginia can expect a rate cut averaging $5.89 per month (for a typical residential household) thanks to the pass-through of lower fuel costs. Industrial customers will get a 10% rate cut, according to the company’s latest press release.

    Dominion credits mainly the efficiency of its newest combined cycle natural gas plants in Brunswick County and Greensville County along with low natural gas prices. The utility also gives a nod to increased solar output.

    That’s good news, and let’s take whatever we can. As Dominion moves steadily to more wind and solar over the next 30 years, the fuel component (which comprises about 20% of the total electricity bill) could continue to decline. We’ll see. The sun and wind are free. But they require backup power, most of which will come from natural gas turbines. And turbines, which ramp up and down, do not run as efficiently as do combined-cycle gas units.

    Also, while solar is cost-competitive, the offshore wind farm Dominion is planning will not be. The high capital cost of erecting the turbines will overwhelm the savings from zero-cost wind.

    • I do not think wind and solar are “free”. There are substantial Operating and maintenance costs for both although the “fuel” is “free” compared to say gas plants that also have “O&M” and fuel costs.

      I ALSO have asked this question:

      If Dominion is allowed to make a profit selling electricity generated from coal, gas and nukes – why is it wrong for them to also make a profit from wind/solar?

      When we calculate costs – 1. – we need to make sure we are including the O& costs – that are especially relevant for Nukes but also for wind/solar – it’s just misleading to say they are “free”.

      2. – Whoever builds and operates wind/solar – is going to expect a profit.
      Is the issue that Dominion’s profit is higher than 3rd party competitors or for that matter 3rd party partners/collaborators like we see with some “merchant” gas (and still a few coal plants)?

      on this: ” offshore wind farm Dominion is planning will not be. The high capital cost of erecting the turbines will overwhelm the savings from zero-cost wind”

      if we look at the levalized costs of offshore wind – don’t those costs INCLUDE the high capital costs?

      If the capital costs of offshore wind are high, wouldn’t that have to be taken into account when they show levalized costs?

    • Natural gas is at historic low depressed price right now, so presumably that plays favorably into the Dominion’s rate of return on the nat gas plants. Especially with the mild winter to date, unless we get a polar vortex again this year, which had been the trend last couple years. Cherry Blossoms have been normal to late bloom last couple years, this year figures to be early, but I have not heard a probable bloom date quoted yet.

  5. There are different LCOE tables depending on the source.

    Here is one that shows that both solar and wind are NOT low cost :

    http://www.safremaenergy.com/lcoe/

  6. Very useful chart. You can see why Dominion is promising to build the wind project for 160% of the cost of that most expensive natural gas option. Those are the so-called peaker plants. They only run to fill a short term gap in supply, and because they run so seldom, the levelized cost of energy is much higher.

  7. Larry, I agree with you on the end–more sustainable power, lower CO2. But, I agree with Steve (and others) on most of their criticism of this bill. The Democrats are so focused on reducing fossil fuel use that they are not taking a broader view. As Tom has argued repeatedly, it is possible to have both–more sustainability and lower costs. But, that would mean messing with the status quo, disrupting Dominion’s monopoly. And the Democrats are not willing to do that. The fact that Dominion was involved in the drafting of this bill and is supporting it should tell us something. Maybe the Democrats felt that this was the only way to get to where they wanted. But they should have tried to do better, rather than settling with a bad compromise to begin with.

    • Yep. But in terms of the realationship itself with Dominion – I don’t think the Dems are any worse than the GOP. Why should we expect the Dems to do any better with changing the nature of the state’s relationship with Dominion than the GOP?

      The Dems, just played virtually the same game as the GOP did – to get what THEY wanted. Remember, before that, there was all of this stuff about Dominion keeping overcharges and tax rebates and plowing them into high priced energy conservation technology rather than refunds.

      I just don’t see what the Dems are doing now as any worse than the GOP did before them.

      Dominions goals are to maximize the value of their monopoly – not to defend fossil fuels and you gotta give them credit – they figure out the politics and get their way!

      As an aside and separate from the above – it’s clear that the Dems in the General Assembly have no clue what the serious climate activists think needs to be done. They’re responding to the most shallow of those who say they are concerned about climate… i.e. ANY cost financial or reliability-wise to move away from fossil fuels.

      On the other hand, if wind/solar were truly cost-effective, every inhabited island in the world would have switched to solar/wind energy and the reality is very few have.. you can count them on your fingers.

      What to do? – if you ask 100 different people, you’re gonna get 50 different answers – and the elected in the GA are not exactly wizards at the right answers.

      They’ve actually harmed the effort to move to renewables… and Dominion will be able to say (once again), “we tried and it failed”.

      • I don’t think the Democrats are worse than the Republicans in regard to Dominion. I had expected, hoped, that they would be better. After all, they declared their independence from Dominion and many refused to take contributions from it. And you are right, many Democrats “have no clue what the serious climate activists think needs to be done” and are grabbing the first thing that promises a big move away from fossil fuels, without examining more cost-effective models. By the way, I think they are not examining those other models because they included Dominion in their early deliberations and I am sure the company steered the discussion away from alternative models. Big disappointment.

  8. I never got a good feel for what the Green folks were actually advocating for and then suddenly it was done – and it was awful.

    Maybe the Green folks had an explicit approach, and they just got skunked but there was a dearth of info about the whole effort until it was basically over. That’s not usually a good sign.

  9. Pingback: Thought Experiment: Dominion as a Media Company | Bacon's Rebellion

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