Washington Post: December 17, 2018

Critics say customers pay 'Dominion tax' because utility is so loosely regulated

Del. Sam Rasoul Vows to Repeal the ‘Tax’ and Challenge Laws that let Monopolies Write their Own Regulations

Gregory S. Schneider, The Washington Post

RICHMOND, Va. – A new political action group taking aim at Virginia’s biggest utility claims that customers of Dominion Energy pay excess rates of $254 a year because of poor state oversight.

Calling it a “Dominion Tax,” the group Clean Virginia released a study Monday that attempts to quantify what consumers pay for electricity beyond the cost of generation, production and delivery.

“These taxes are the result of an abuse of state-sanctioned market control and are enabled by outdated regulatory structure, insufficient campaign finance and ethics laws, and weak consumer protections,” the group wrote in a 26-page report.

A spokesman for Dominion said that the group’s findings are incorrect and that the utility’s rates are 18 percent below the national average and 32 percent below the Mid-Atlantic average. David Botkins, the Dominion spokesman, said rates are scheduled to decrease after the first of the year.

Clean Virginia’s effort shows the degree to which opponents are challenging the enormous political stature of Dominion, which is Virginia’s most generous corporation when it comes to campaign contributions. The Dominion logo graces office buildings, theaters and numerous charity events in Richmond, and its executives have close relationships with legislators of both parties.

But last year, many of the 15 Democrats who won election to the House of Delegates in what had been Republican districts signed pledges to avoid taking contributions from Dominion. Clean Virginia was formed earlier this year to help continue that momentum.

The group is headed by Michael Bills of Charlottesville, a wealthy contributor to Democratic candidates. In the past two years, Bills has given more than $800,000 to Democrats in the state, according to the Virginia Public Access Project, which tracks money in state politics. More than half that amount last year went to the campaign of Democratic Gov. Ralph Northam.

As campaigns gear up for next year’s legislative elections, Bills has donated more money to candidates than Dominion, according to VPAP. And Clean Virginia said it intends to mount a “robust” digital advertising campaign against Republicans and Democrats alike who have taken significant donations from Dominion, including Sen. Dick Saslaw, D-Fairfax, incoming House Minority Leader Eileen Filler-Corn, D-Fairfax, and House Speaker Kirk Cox, R-Colonial Heights.

“Clean Virginia is a dark-money, radical-left advocacy organization funded by Michael Bills, who knows nothing about our rate structure,” said Botkins, the Dominion spokesman. “The average bill for a residential customer is $114.42 a month. That’s less than the large Starbucks pumpkin spice lattes Clean Virginia staff has over the course of a month.”

To produce the estimate of Dominion’s “excess” charges to consumers, the group started with reports from the state’s Corporation Commission, the agency tasked with overseeing utilities.

The commission’s job has been severely limited since at least 2015, when the General Assembly passed an electricity rate freeze.

This year, the Legislature replaced that rate freeze with a sweeping overhaul of utility regulation, spearheaded by Dominion, that continues to limit the commission’s ability to oversee electricity rates. The new law allows Dominion – as well as its smaller counterpart APCO, which powers homes in the southwestern portion of the state – to use excess profits for new projects instead of returning them to ratepayers, as had been the practice.

In August, the commission estimated that Dominion earned an extra $365 million in 2017 over what the agency had permitted in its last rate review.

In addition to that amount, Clean Virginia looked at other Dominion costs that it said were extraneous to the basic monopoly function of generating and delivering power. Those included advertising, executive compensation beyond industry averages, lobbying and travel expenses as laid out in corporate documents and state filings. The group also added up political donations and what it said were excessive costs of the Atlantic Coast natural gas pipeline project.

Those totals led to Clean Virginia’s estimate that the average Dominion customer is paying $254 in excess costs per year.

Dominion’s Botkins took issue with the methodology, saying the company’s ads are paid for by shareholders and PAC contributions are from employees.

The group performed a similar calculation on APCO, finding what it said was $89 in excess yearly charges for those customers.

The U.S. Energy Information Administration says Virginians pay less for electricity than the national average, at 9.09 cents per kilowatt-hour vs. 10.41 cents nationwide, based on 2016 data.

Clean Virginia calls for the state to make several changes to keep a tighter rein on its utilities, including reinstating regular rate reviews by the commission and reforming the way the state calculates allowable rates of return.

While such steps might have been a nonstarter in the past, some Democrats in the General Assembly are ready to press the case in next year’s session, which begins in January.

“In the 2019 legislative session, we will fight to repeal this ‘Dominion Tax’ and change the laws that too often allow utility monopolies to write their own rules – to their own financial advantage – in Richmond,” Del. Sam Rasoul, D-Roanoke, said in a statement released by Clean Virginia.