Clean Virginia’s statement on SCC’s approval of Dominion’s offshore wind project
By Diana Williams | August 10, 2022

On Friday, the State Corporation Commission (SCC) approved Dominion Energy’s offshore wind project, the single largest energy project ever built in Virginia and the first offshore wind project owned by an investor-owned utility.  

“While we welcome the necessary shift to clean electricity generation in Virginia, this project is unprecedented in size, cost and complexity. As such, it needs strict consumer protection mechanisms in place to ensure that the clean energy transition does not create additional financial burdens for Virginia families,” said Brenann Gilmore, Clean Virginia’s Executive Director.

Clean Virginia emphasized in its testimony to the commission earlier this year that there are many risks associated with this project that necessitated higher levels of consumer protection including:

  • Requiring Dominion to regularly report (at least quarterly) and to retain an independent monitor during the construction phase of the project.
  • Implementing a capital cost cap at the current estimated amount of $9.65 billion. 
  • Requesting the commission assess if the current utility-owned model is the most appropriate mechanism for the remaining 2,600 MW of offshore wind development contemplated in the  Virginia Clean Economy Act. (The Commission has previously recognized that utility ownership poses additional risks, whereas, the risk is most incurred by third-party owners when energy is procured via Power Purchase Agreements.) 

“The State Corporation Commission’s inclusion of key reporting requirements, that Clean Virginia and other stakeholders requested, is a welcome addition that will allow for more effective monitoring of the project. In addition, the inclusion of a performance guarantee will more fairly distribute the risk of the project between ratepayers and shareholders. However, we note that the Commission did not approve an independent monitor that would have provided an additional, much-needed layer of transparency,” Gilmore said.

Clean Virginia also supported the Attorney General’s performance guarantee proposal which would hold customers harmless in the event the project does not generate as much energy as forecasted. 

Despite citing all the risks associated with the utility ownership model, the SCC denied Clean Virginia’s request for an assessment of the appropriateness of the utility ownership model and did not provide a detailed explanation for its denial. Nonetheless, the consumer protections now in place means that ratepayers bear less risk for Virginia’s largest energy project.

Gilmore added: “As we move forward, Virginia must study all options available to procure the second phase of offshore wind established in the Virginia Clean Economy Act. Utility ownership is not the only, and likely not the most affordable, option for offshore wind development in Virginia.”


Clean Virginia is a 501(c)4 independent advocacy organization with an associated Political Action Committee, Clean Virginia Fund. Clean Virginia works to fight corruption in Virginia politics in order to promote clean energy, a robust, competitive economy, and community control over our energy policy. We are motivated by the core belief that our democracy should serve everyday Virginians over special interests.


About The Author

Photo of Clean Virginia’s statement on SCC’s approval of Dominion’s offshore wind project
Diana Williams (she/her)

Diana loves telling stories about the human experience. She’s the founder of Williams Multimedia, a production company specializing in audio storytelling. Her reporting has focused on histories of people of color, LGBTQ+ people and the intersections where those two communities meet. Diana holds an MA in journalism and public affairs from American University. Diana and her husband Clarence have lived with their two sons in the Shenandoah Valley since 1997. She is on the Board of Directors for the Community Foundation of the Central Blue Ridge and the Virginia School Boards Association. She is also Vice Chair of the Waynesboro School Board.

Clean Virginia Invests $650,000 in 2023 Candidates for the Virginia General Assembly
By Cassady Craighill | July 15, 2022

Nearly 60 candidates publicly refuse contributions from Virginia utility monopolies

FOR IMMEDIATE RELEASE 

CONTACT:

Cassady Craighill, Clean Virginia Deputy Director 

[email protected], 828-817-3328

July 15, 2022

Clean Virginia Invests $650,000 in 2023 Candidates for the Virginia General Assembly 

Nearly 60 candidates publicly refuse contributions from Virginia utility monopolies

Charlottesville, VA — Clean Virginia announced a $650,000 investment to support Senate and House of Delegates candidates, including nearly 20 new candidates, who have demonstrated a commitment to an equitable clean energy transition and fighting corruption in Virginia. The financial support comes from Clean Virginia’s Political Action Committee, Clean Virginia Fund.

“The new candidates who have come forward for a chance to represent their districts in the Virginia General Assembly are a deeply impressive group, with a wide range of backgrounds, and united in a commitment to tilt the balance of power in Virginia back towards the people,” said Brennan Gilmore, Clean Virginia Executive Director. “We are pleased to support our clean energy and good governance champions in the Virginia House and Senate as well as offer early support to those new candidates who have taken a principled stance against accepting money from the monopoly utilities they will be tasked with regulating, if elected to the General Assembly.”

With nearly 30 seats lacking an incumbent due to redistricting, the 2023 election presents a once-in-a-decade opportunity to elect a new generation of clean energy and good governance leaders. While Clean Virginia has provided early funding, formal endorsements of candidates will take place in 2023. In several cases, multiple candidates within the same district are receiving funding. These individuals demonstrate Clean Virginia’s commitment to supporting a robust primary process that provides an opportunity for diverse voices and viewpoints to be heard.

To learn more about Clean Virginia’s Political Action Committee and political funding, visit www.cleanvirginia.org/who-we-support/

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Clean Virginia is a 501(c)4 independent advocacy organization with an associated Political Action Committee, Clean Virginia Fund. Clean Virginia works to fight corruption in Virginia politics in order to promote clean energy, a robust, competitive economy, and community control over our energy policy. We are motivated by the core belief that our democracy should serve everyday Virginians over special interests.


About The Author

Photo of Clean Virginia Invests $650,000 in 2023 Candidates for the Virginia General Assembly
Cassady Craighill (she/her)

A North Carolina to Virginia transplant via D.C., Cassady has spent over a decade engaging audiences about energy, climate change, and civic engagement. After earning an M.A. from Georgetown University and publishing research about public perceptions of complex technologies, Cassady worked for Greenpeace USA where she developed strategies for communicating about climate impacts, the influence of the oil and gas industry on our democracy, and the energy footprint from the internet. An expert in rapid response communications, Cassady’s quotes have appeared in the New York Times, the Washington Post, and Associated Press. She lives in Charlottesville with her husband and daughter.

Opinion: Don’t saddle Virginians with higher energy costs
July 10, 2022

By Kendl Kobbervig and Kidest Gebre

In May, Virginia’s largest electric utility monopoly asked State Corporation Commission regulators to raise bills anywhere from $15 to $24 a month for the average energy customer. Dominion Energy already charges its 2.5 million Virginia customers, many of whom live in Hampton Roads, some of the highest electricity bills in the nation. If regulators grant the electric utility’s request, expenses will increase by up to $288 a year for the typical household, a sum high enough to push families into making tough decisions between rent and utility bills. Four Virginia cities, three of which are in Hampton Roads, rank in the top 10 for highest evicting cities in the nation. Working families already struggling to make ends meet will soon face another economic headwind thanks to a broken utility regulatory system. 

Dominion claims that it needs the bill increase to cover a $3.3 billion gap between expected and actual fossil fuel costs due to the war in Ukraine, inflation, and the pandemic. While money is tight for all Virginians, families already on the brink of economic hardship will pay the highest price for Dominion’s overreliance on fossil fuels. Instead of holding Dominion accountable for fuel costs, current rules shield the utility by allowing it to pass 100% of the costs along to its customers. Even before recent economic shocks, 75% of Virginia households reported unaffordable energy expenses. This “energy burden” crisis disproportionately affects low-income families and communities of color who are more likely to face tough choices between paying rent or paying electricity bills. 

Decades of reckless investments in fossil fuels have made Dominion even more vulnerable to global fuel market disruptions. Because regulators are powerless to prevent the utility from passing fuel costs to customers, Dominion has no incentive to make cost-conscious investments, minimize fuel use or transition to renewables. On the contrary, in the last decade, the utility has doubled down on fossil fuel investments, adding four massive, baseload gas plants and the $1.8 billion Virginia City Hybrid Energy Center, one of the last coal plants to open in the country. Today, that plant makes up one of the largest charges on customer bills. In fact, according to Dominion itself, only one of the utility’s eight coal plants was projected to provide “economic value” to customers, even though those customers are the ones stuck paying the bill. And now that fossil fuel prices are soaring amidst global turmoil, the utility is only adding to the energy burden by forcing Virginians to shoulder those costs alone, leaving its profits, executive pay, and shareholder dividends untouched. 

The good news is that it doesn’t have to be this way. Other states have advanced measures that hold utilities accountable for fuel costs by aligning incentives with customer benefit. In 2018, the Hawaii Public Utilities Commission approved a sharing mechanism that splits the risks associated with fuel price volatility 98% and 2% between customers and the utility. In Vermont and Oregon, utilities have taken on 10% of the risk for fuel price volatility as far back as 2006 and 2007, respectively. Similar risk-sharing measures in Virginia could encourage more customer-focused utility performance and a swift, affordable transition to renewables. 

For now, the laws governing Virginia’s utilities leave regulators with a single option: to soften the impact to customer’s bills by deferring fuel cost recovery over a three-year period rather than over a single year. Customers will still take on 100% of fuel costs, but they’ll just pay for those costs over a longer period of time. This lose-lose situation is not an accident, nor is it a one-off. And until the state passes legislation to more fairly balance the interests of customers and utilities, Virginians will continue to pay the price for Dominion’s shortsighted planning.


Kendl Kobbervig is the Advocacy and Organizing Manager at Clean Virginia. Kidest Gebre is the Energy Justice Organizer at Virginia Interfaith Power and Light

 

Clean Virginia joins with fellow advocacy organizations in support of energy efficiency
By Diana Williams | May 12, 2022

Dominion lags behind peer utilities in meeting energy efficiency goals for residential customers

FOR IMMEDIATE RELEASE 

Richmond — Energy reform organization Clean Virginia requested Wednesday in public testimony that the State Corporation Commission (SCC) require Dominion Energy to accelerate its energy efficiency outreach and education campaign, particularly in light of the company’s request to increase customer bills.

“Despite the value of energy efficiency to customers and the codified financial incentive for Dominion Energy included in the Virginia Clean Economy Act (VCEA), the company’s long-term plan still fails to meet the law’s minimum targets and the vast majority of Dominion customers have no awareness of Dominion’s residential energy efficiency programs at all,” Cassady Craighill, Clean Virginia’s Deputy Director testified in remarks to the SCC.

Dominion Energy, Virginia’s largest utility monopoly, has filed for approval of a set of Energy Efficiency programs necessary to comply with the energy savings targets established in the Virginia Clean Economy Act. Dominion is not yet on track to comply with these savings targets, according to an analysis ordered by the SCC.

Compared to peer utilities, the performance of Dominion’s residential energy efficiency programs is notably low. Only 19% of surveyed residential customers were familiar with Dominion Energy programs and only 13% participated in a program in the last three years,  according to a long-term plan report required by the SCC. The report included several areas of improvement and emphasized the need to raise public awareness and consolidate the different utility programs.

“It shouldn’t be a battle to get energy efficiency tools in place, but it is because it interferes with the entrenched power and profit of utility monopolies. Regardless, putting energy efficiency first will put Virginians, and not profits, first. And that’s what we need,” said Laura Gonzalez, Energy and Regulatory Policy Manager at Clean Virginia.

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About The Author

Photo of Clean Virginia joins with fellow advocacy organizations in support of energy efficiency
Diana Williams (she/her)

Diana loves telling stories about the human experience. She’s the founder of Williams Multimedia, a production company specializing in audio storytelling. Her reporting has focused on histories of people of color, LGBTQ+ people and the intersections where those two communities meet. Diana holds an MA in journalism and public affairs from American University. Diana and her husband Clarence have lived with their two sons in the Shenandoah Valley since 1997. She is on the Board of Directors for the Community Foundation of the Central Blue Ridge and the Virginia School Boards Association. She is also Vice Chair of the Waynesboro School Board.

Legislators should invest in Virginia’s future, not Dominion Energy’s stock
April 28, 2022

This blog was updated on May 4th with the addition of stock ownership by several Virginia lawmakers.

By Kayli Ottomanelli, Clean Virginia Advocacy Fellow

Nearly 60 U.S. Congress members made headlines last month when they violated federal law by failing to properly report their stock ownership and financial trades in accordance with the decades-old Stop Trading on Congressional Knowledge, or Stock Act. These elected officials have faced widespread criticism for using their political positions and access to nonpublic information for personal financial gain. 

Unfortunately, the issue of elected officials serving their stock portfolios rather than their constituents extends beyond just the federal level – it exists here in Virginia, as well. Currently, six members of the Virginia General Assembly own substantial quantities of stock in Dominion Energy. According to annual candidate and incumbent disclosures, which were updated this month, these lawmakers own anywhere from $825,000 to $1.25 million in Dominion stock combined. Additionally, three members of the Virginia legislature, Minority Leader Tommy Norment, Senator Bill DeSteph, and Delegate John Avoli each owned at least $250,000 worth of Dominion Energy stock alone in 2021. 

Although opponents of stock-ban legislation have asserted that the United States is a free-market economy and everyone, including elected officials, should be able to participate in stock trading, this argument becomes problematic when lawmakers are purchasing stock in the corporate monopolies they are tasked with regulating, as is the case with Dominion Energy. Captive customers of utility monopolies, like the two of three Virginians that are Dominion customers, lack the luxury of shopping around for a better deal on their electricity. It is a clear conflict of interest for elected officials to participate in legislative matters in which they have a vested financial interest. 

Currently, conflict of interest laws require Virginia lawmakers to recuse themselves from legislative matters when they have a personal interest in the affected corporation. Although well-intentioned, in practice this legislation is unenforceable under Virginia’s lax disclosure rules. The Virginia General Assembly Conflicts of Interest Act requires any legislator who receives $5,000 or more in dividend payouts from stock ownership to disqualify themselves from participating in votes on relevant legislation. However, candidate and incumbent disclosure rules only require elected officials to disclose their investments within an estimated range that spans nearly $50,000, rather than reporting the exact value. As a result, it is impossible to tell just how much legislators are financially benefiting from certain votes.

Due to these legislative loopholes, elected officials have continued to participate in matters in which they have a vested financial interest. For example, with at least $250,000 in Dominion stock holdings, Senator DeSteph likely received nearly $9,000 in dividends from his shares in Dominion Energy last year, clearly placing him above the $5,000 threshold set by the General Assembly Conflicts of Interest Act. Despite this, he is still actively participating in legislative matters that impact how the corporate utility is regulated. In the 2020 legislative session, Senator DeSteph cast the only opposing vote on a piece of bipartisan utility legislation intended to give the State Corporation Commission more discretion to reduce the rate of return on common equity for investor-owned electric utilities. This begs the question: how can we expect legislators to fairly regulate Dominion Energy, when they themselves directly profit off of the corporation?

To strengthen existing legislation and hold lawmakers accountable, Delegate Dan Helmer introduced a bill (House Bill 1252) during the 2022 legislative session to prohibit any member of the General Assembly from owning stock in public service corporations like Dominion during their term of office. This bill would directly eliminate conflict of interests and ensure legislators are acting in the interest of Virginians, not their wallets. Passing this common-sense bill could also help restore public trust and faith in our institutions. Unfortunately, this bill was sent to the House Rules Committee where it never received a hearing. By denying the legislation a hearing in committee, lawmakers effectively killed the bill without having to vote on it. This method of killing legislation is particularly underhanded, as it allows elected officials to sidestep taking a stance on this issue on public record and dodge any electoral consequences for their actions. 

Share this blog post now on social media to help protect future good governance legislation and to take a stance against our elected officials being allowed to profit off of their legislative decisions. 

Dominion Energy Virginia customers should receive refunds soon, no thanks to the monopoly
By Diana Williams | February 25, 2022

A freshman lawmaker took on Dominion, demanding customer refunds and scoring a win for Virginians

Virginia’s largest electric utility, Dominion Energy, is required to refund over $300 million to its Virginia customers and cut future rates by $50 million thanks to Del. Suhas Subramanyam’s 2020 consumer protection law (HB 528) and a 2021 settlement between the State Corporation Commission (SCC), the Office of the Attorney General, and the utility monopoly. 

The result of Dominion’s triennial review of rates, also known as a rate case, represents a victory for consumers, with costs of living steadily rising and every dollar needing to count. It’s also clear evidence that more utility regulatory reform is urgently needed. Dominion is getting away with only refunding a fraction of the $1.1 billion it overcharged customers. The settlement further proves that rates could already be lower – the adjustment to future rates is less than a quarter of the $212 million SCC staff recommended. 

Here’s what you need to know about the refunds:

Why are Dominion Energy customers receiving a refund?
House Bill 528 restored the SCC’s authority to establish recovery of costs associated with early retirements of coal plants in a manner that best serves customers. Before this bill, Dominion could unilaterally decide how to recover these large costs. Absent this legislation Dominion would have recovered over $900 million from customers all at once in an attempt to deprive customers of refunds and a rate cut. 

I’m a Dominion Energy customer in Virginia. When will I receive my refund?
Beginning January 29, 2022 and throughout the 2022-2023 period, many Dominion residential customers should receive approximately $67 refunded back to customer accounts in the form of a check or bill credit. The total amount refunded will be based on a residential customer using 1,000 kWh per month from 2017 to 2020. No one will call you to discuss or issue your refund.

Dominion has overcharged customers by $1.1 billion dollars. Why are customers not getting bigger refunds?
Dominion-backed laws have largely handcuffed the SCC in recent years and prevented the agency from taking the appropriate accounting and rate-making measures to protect consumers. For example, Dominion drafted and lobbied extensively to pass the 2018 Grid Modernization Act, which capped rate reductions for customers at only $50 million. 

What happens if Dominion overcharges Virginians again?
Not if, when. Based on current laws, Dominion is overcharging Virginians right now and will continue to do so until the SCC has all the tools it needs to hold utilities accountable and keep prices low for all Virginia families and businesses. Legislators should continue the bipartisan progress to fix the loopholes that generate unearned excess profits and customer overcharges, including restoring the SCC’s authority to properly regulate Dominion.


About The Author

Photo of Dominion Energy Virginia customers should receive refunds soon, no thanks to the monopoly
Diana Williams (she/her)

Diana loves telling stories about the human experience. She’s the founder of Williams Multimedia, a production company specializing in audio storytelling. Her reporting has focused on histories of people of color, LGBTQ+ people and the intersections where those two communities meet. Diana holds an MA in journalism and public affairs from American University. Diana and her husband Clarence have lived with their two sons in the Shenandoah Valley since 1997. She is on the Board of Directors for the Community Foundation of the Central Blue Ridge and the Virginia School Boards Association. She is also Vice Chair of the Waynesboro School Board.

Dominion, attorney general and SCC staff reach deal in contentious rate case
October 18, 2021

If approved, customers would see $330 million in refunds and a $50 million rate reduction

by Sarah Vogelsong, Virginia Mercury

Dominion Energy announced Monday evening that it has reached a settlement with Virginia’s Office of the Attorney General and public utility commission staff to resolve disputes in its ongoing rate review, the first since 2015. 

The commission staff and the attorney general have alleged the utility, Virginia’s largest, raked in almost $1 billion in excess profits between 2017 and 2020. 

Under the settlement, which must still be approved by the State Corporation Commission, customers would receive $330 million in refunds and a $50 million reduction in rates going forward. The going-forward rate reduction is the maximum amount allowed by law under the 2018 Grid Transformation and Security Act. For the average residential customer, Dominion estimated that those figures would translate to a refund of approximately $67 and a monthly bill decrease of about 90 cents. 

Dominion would receive a slightly higher return for its shareholders with a 9.35 percent return on equity compared to the current 9.2 percent rate. The electric utility had requested a return of 10.8 percent. 

Additionally, using another mechanism created by the Grid Transformation and Security Act, $309 million in the company’s revenues over the past four years will be used to offset costs of the Coastal Virginia Offshore Wind pilot and expenses related to the rollout of smart meters and a customer information platform. 

In a late Monday afternoon news release, Dominion characterized the deal as “a balanced, reasonable and cost-effective approach.” 

“This is a consensus outcome, and it allows us to make sure all of the involved parties have reached a decision that puts the customer’s interest first,” said company spokesperson Rayhan Daudani, who said negotiations over the agreement had been underway for “the past couple weeks.” 

The review, which began in March, represents regulators’ evaluation of the electric utility’s earnings over the past four years as well as an assessment of whether its rates should be adjusted going forward. While Dominion’s rates were previously reviewed by the SCC every two years, the 2018 Grid Transformation and Security Act revised that framework to every three years while also lifting a rate freeze instituted by the General Assembly in 2015, purportedly in response to fears about the costs of then-President Barack Obama’s Clean Power Plan. 

Besides the Office of the Attorney General and SCC staff, other signatories to the agreement announced Monday include the Apartment and Office Building Association of Metropolitan Washington, Costco, Direct Energy, Kroger, Harris Teeter, the Virginia Committee for Fair Utility Rates and Walmart. 

Nine other groups that are participating in the review did not sign the agreement but are not opposing it. They include Appalachian Voices, Calpine, Chaparral, Constellation New Energy, the Department of the Navy, Microsoft, PJM Power Providers Group and Shell Energy North America.

Will Cleveland, an attorney with the Southern Environmental Law Center representing Appalachian Voices, said that under the settlement, customers would get “about as big a refund as was possible under the law” but that reforms to state laws governing utility regulation are still needed.   

“This is as good as the bad system we have will allow, but we can improve the system,” he said. 

Regulatory reform has been a hotly debated topic during Virginia’s past two regular legislative sessions, with a more progressive faction of Democrats joining with some Republicans across the aisle to combat what they see as state laws that are overly favorable to Virginia’s two largest investor-owned electric utilities, Dominion and Appalachian Power. 

These utilities’ rates are regulated differently than those of other utilities in the state as part of a complex framework established in 2007 when Virginia abandoned a short experiment with deregulation. 

A 2020 law could decide whether Dominion customers get zero or $372 million in refunds

Especially contentious in the current review has been the impact of a 2020 law known as House Bill 528 that returned to state regulators the right to set the period over which the utility could recover the costs of power plants that had been retired early. 

Dominion argued that over $680 million in such costs should be recovered all at once, reducing the pool of excess earnings available for refunds, and, in its most recent filings, disputed whether the law applied to the current case at all. 

In return, SCC staff, the Attorney General’s Office and Appalachian Voices contended that the costs should be recovered over much longer periods of time to ensure that customers received refunds and rate reductions. 

Under the settlement announced Monday, the cost recovery period for the retired plants would run through 2023. The $330 million refund due to customers would fall between SCC staff’s calculation of $312 million and the Attorney General’s and Appalachian Voices’ $372 million figure.  

Settlements in utility rate cases are not unprecedented, with Dominion most recently agreeing to one to conclude its 2009 case. 

Hearings before the SCC on the rate review are scheduled to begin Friday. 


Virginia Mercury is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Robert Zullo for questions: [email protected] Follow Virginia Mercury on Facebook and Twitter.
A 2020 law could decide whether Dominion customers get zero or $372 million in refunds
October 4, 2021

Dominion Energy’s Virginia customers could see as much as $372 million in refunds if state regulators agree with public utility commission staff and Virginia’s attorney general about how the utility’s hundreds of millions of dollars related to coal plant closures over the past four years should be handled. 

The decision, which will be made by the State Corporation Commission in early 2022, will be handed down as part of Virginia’s first review of the electric utility’s rates and earnings in six years. 

Serving roughly 5 million of Virginia’s 8.5 million residents, Dominion is the state’s largest electric utility and is both a major player and campaign donor in Richmond, where it has close ties with lawmakers on both sides of the aisle.

While Dominion says that between 2017 and 2020, it didn’t earn more than what state law allows, the commission staff and Virginia’s attorney general, contend the utility raked in almost $1 billion in excess profits.  

Which argument regulators accept will be heavily influenced by their interpretation of a wonky 2020 state law that governs how the utility can recover the costs of fossil fuel plants that have been shut down early. 

Hanging in the balance are not only potential customer refunds — which SCC staff say total $312 million and the Attorney General’s Office pegs at $372 million — but also the possibility of regulators cutting electric rates in the future. Base rates have remained around the level established in a 1992 case, with most of the increases in customer bills since then coming from riders.

The State Corporation Commission’s decision on the retirement costs is “the whole ballgame,” said Southern Environmental Law Center attorney Will Cleveland, who is representing nonprofit Appalachian Voices in the rate case. 

The 2020 state law, House Bill 528, “imposes upon the commission an obligation to set the payoff period in the way that best serves the customers,” said Cleveland. “And Virginia utility law since 2007 has never prioritized the customer.” 

Though the law went into effect on July 1, 2020, Dominion said in a legal memo filed Friday that it would be unconstitutional to apply it to the current case because the company had already made the decision to retire the relevant plants prior to passage of the bill, when it thought all of the costs could be recovered at once.

“The General Assembly can certainly change the ‘rules of the game’ prospectively within the confines of constitutional protections. It cannot, however, establish a ground rule … have the utility act and rely upon that ground rule; and then change the rule to apply it retroactively; impacting how over a billion dollars of costs are recovered, what obligations the company has for refunds, and how its rates will be set prospectively,” the utility argued. “Such retroactive action would impermissibly impact the company’s rights and responsibilities.”

Calculating earnings

Virginia law establishes a complicated framework for handling any earnings taken in by Dominion and the state’s other large electric utility, Appalachian Power Company, that exceed the utilities’ costs of providing service and granting returns to shareholders. 

By statute, both utilities are allowed to keep a generous share of any excess earnings they take in. Not only do they retain all earnings up to 0.7 percent above their state-set return on equity, but state law explicitly allows the utilities to keep 30 percent of all earnings above that upper limit. The remaining 70 percent is returned to customers. 

Dominion’s current return on equity is 9.2 percent. In practice, that means it will keep all earnings up to a 9.9 percent ceiling as well as 30 percent of all additional over-earnings. 

Kevin O’Donnell, a consultant retained by the U.S. Department of the Navy to represent the interests of the federal executive agencies in the rate case, said in testimony that “such overearnings are not to be taken lightly as the amount of dollars involved is in the millions.” 

The Department of the Navy estimated that Dominion had taken in “at least $243 million” and “perhaps as much as $500 million” in excess earnings between 2017 and 2020. The Office of the Attorney General has put the number at $994 million, while SCC staff estimate it at $961 million. 

“The Virginia economy, particularly in light of the COVID-19 pandemic of the past two years, could use a multi-million dollar infusion related to the (Dominion) over-earnings as opposed to these overearnings generally flowing out of Virginia in the form of potentially higher dividends paid to stockholders,” wrote O’Donnell. 

Power plant retirement costs

While several factors will play a role in determining exactly how much Dominion earned over the past four years and how much — if anything — it may owe customers, the costs of retiring fossil fuel plants early may be the most consequential. 

Those costs, linked to the early retirement of plants in 2019 and 2020, are equal to roughly $686 million in SCC staff’s estimation. 

How that money is accounted for will have big implications for customers.

Prior to 2018, the SCC had the authority to determine the number of years over which Dominion and Appalachian Power could recover from ratepayers the costs of early power plant retirements. That year, however, a provision of the Grid Transformation and Security Act passed by the General Assembly gave the utilities the right to recover all of those costs in a single year — allowing them to offset any overearnings that might otherwise have to be returned to customers. 

In 2020, with both utilities’ first rate reviews in years looming, lawmakers from both parties balked at the prospect. 

In a surprise vote that went against the wishes of not only Dominion, but two of its most reliable allies in the Senate, Majority Leader Dick Saslaw, D-Fairfax, and Minority Leader Tommy Norment, R-James City, both chambers of the General Assembly passed HB528, which was aimed at protecting ratepayers. 

The bill, carried by Del. Suhas Subramanyam, D-Loudoun, explicitly gave the SCC the authority to independently assess the costs of prematurely closed power plants and set a recovery period for those costs “that best serves ratepayers.” 

“The utility has an obligation to the shareholders. We have an obligation to the ratepayers. They are the folks who elect us,” said Sen. Richard Stuart, R-Stafford, during a floor debate on the bill. “Regardless of whether anybody made a mistake or thinks they made a mistake in that grid transformation bill, our obligation and responsibility remains to the ratepayer.” 

All at once or over 25 years?

Dominion says recovering all of the early retirement costs during the 2017-2020 period being evaluated by regulators is in customers’ best interests. 

“Under this accounting, customers are protected,” wrote Dominion Energy Virginia President Edward Baine in testimony. 

“Spreading those costs in the future does just that — it requires customers to continue to fund those investments, including any applicable financing costs, even though there were sufficient revenues to fully recover them during a prior period,” added utility consultant John Reed. “This would result in increased costs during those future periods, reducing available earnings and even potentially necessitating a rate increase depending on the length of the recovery period.” 

But SCC staff firmly disagreed, arguing for a 25-year recovery period for the $686 million in costs it calculates are linked to the closures.

“Twenty-five years best serves ratepayers, or customers, because it results in significant, immediate and known benefits to customers,” testified SCC Division of Utility Accounting and Finance Deputy Director Patrick Carr. 

While Carr acknowledged recovering costs over a longer period of time would mean ratepayers will pay a higher dollar figure due to financing, he said other benefits would outweigh those costs. 

Specifically, setting a 25-year recovery period would “reduce expense in the current triennial period by an amount sufficient to provide for refunds and, thus, trigger the opportunity to reduce going-forward rates,” he wrote. 

Under state law, the SCC cannot order a rate reduction if refunds are not issued. 

Another provision of the 2018 Grid Transformation and Security Act capped any reduction of Dominion’s rates during the current review at $50 million annually. 

With both SCC staff and the Office of the Attorney General recommending that the early retirement costs be recovered over a 25-year period, both also say that not only should customers get a refund, but that Dominion’s rates should be reduced by the maximum amount of $50 million. 

Calculations of the refunds due ratepayers differ, however. The Attorney General’s Office puts the figure at roughly $372 million, while SCC staff say the amount due is closer to $312 million. A separate proposal from  Appalachian Voices, a frequent intervenor in utility cases before the SCC, would set the recovery period at 20 years and also puts refunds at $372 million. 

Under Dominion’s proposal, customers would receive no refunds. 

In rebuttal testimony filed with the SCC Friday, Dominion said it did not believe that HB528 applied to its rate case because the retirement decisions were made prior to the July 1 date when the new law went into effect. 

At the time Dominion decided to close the power plants in question, the answer of how the remaining costs should be recovered “was clear and directed by statute,” said Baine. “They were to be recovered immediately through any available earnings, and not pushed forward into the future.”

But even if the new law does apply, the company made it clear that it still considers longer-term cost recovery to be not in customers’ best interests. 

Dominion Director of Regulatory Accounting John Ingram wrote that “it is clear” that SCC staff, the Office of the Attorney General and Appalachian Voices were attempting “to engineer a result that emphasizes short-term bill credits and a rate reduction, without consideration for the impacts that such treatment will have on future customers.”

In earlier testimony, however, Appalachian Voices consultant Heather Bailey said years of Dominion overcharging customers for electricity necessitates action by regulators. 

“When a utility consistently overcharges customers by hundreds of millions of dollars, we can reasonably assume the cause is that rates are too high,” she wrote. “Under that rule, Dominion’s rates have clearly been too high for many years, and the Commission should exercise every tool in its discretion to set fair and balanced rates going forward.”

Virginia Mercury is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Robert Zullo for questions: [email protected] Follow Virginia Mercury on Facebook and Twitter.

Lawmakers ask SCC to analyze Dominion rates with an eye on refunds for customers
August 4, 2021

Eighteen Virginia legislators are asking state regulators to analyze what refunds Dominion Energy customers might receive and what electric rates would be if regulators weren’t bound by provisions in state law that are favorable to the large electric utility’s bottom line. 

“This is Dominion’s first rate case since 2015 and the first since the passage of the VCEA,” the lawmakers wrote in a July 21 letter,  referring to the 2020 Virginia Clean Economy Act that set Virginia on a course to make its electric grid carbon-free by 2050. “The utility is retiring nearly a billion dollars in fossil-fuel-fired power plants and embarking on a new era in energy investments. The massive scale and time horizon for these investments warrants a full analysis that ensures reliable service at a fair price for Virginia ratepayers.” 

The letter asks the State Corporation Commission to conduct a “prospective analysis” as part of its ongoing review of Dominion’s earnings and rates, the first since 2015. 

Specifically, it asks the SCC to assess two questions. First, what refunds might customers be entitled to if regulators didn’t have to accept Dominion’s accounting for certain costs, approve reinvestments of certain over-earnings or allow the utility to keep 30 percent of any over-earnings? And second, what rates would the SCC set if it didn’t have to align its rate of return with returns set for peer utilities and if it could “ensure that rates were just and reasonable while allowing the utility the opportunity to recover its costs plus an authorized rate of return”? 

Broadly, the request is “for a straight comparison of rates both (1) under the SCC’s current legislative shackles, and (2) under traditional ratemaking,” wrote Del. Lee Ware of Powhatan, the letter’s sole Republican signatory, in an email. 

Del. Sally Hudson, D-Charlottesville, who spearheaded the letter, said the legislators’ ask is intended to show regulators there is a “sincere appetite” to understand how current laws are affecting electric utility rates and earnings. 

“Now is a very convenient time to produce these estimates,” she said. “The letter is mostly a way to make sure that the information that might be needed … can be surfaced and addressed.” 

Dominion spokesperson Rayhan Daudani said that “if the legislators want the SCC to do the analysis, then it’s up to the SCC.” 

In a statement, he noted that “Virginia is on the path to a clean energy future due to the regulatory utility framework and supporting legislation in the commonwealth.”

Resolving ‘uncertainty’

Virginia has a notoriously complex approach to regulating its electric utilities, one that Dominion consultant John Reed called “unusually specific” in testimony filed with the State Corporation Commission this March as part of Dominion’s rate review. 

The “Virginia regulatory framework has many features which significantly distinguish it from the structures of other states. First, the Virginia framework reflects a far greater degree of specificity than in most other states,” he wrote. However, that framework “still provides the commission with the latitude to adapt to changing circumstances and relies on the expertise of the commission and its staff to apply their judgment to the facts before it,” he said. 

A coalition largely made up of progressive Democrats and a handful of Republicans in the House of Delegates disagrees. For the past two years these legislators have been pushing for regulatory reforms that they say would give the State Corporation Commission broader discretion in its decision-making, returning power it traditionally held after years of legislative intervention. 

“Dating back to 2007 and every two or three years since then, the legislature has passed legislation taking commission discretion away, which has almost uniformly harmed ratepayers,” said Will Cleveland, an attorney with the Southern Environmental Law Center and an outspoken advocate of regulatory reform. 

The letter “says to me the General Assembly wants to create utility policy based on the commission’s expertise rather than on the utility’s lobbyists,” he said. 

The legislature remains divided, however. Despite strong bipartisan support in the House, every regulatory reform effort proposed during the 2021 General Assembly session was struck down by the Democrat-led Senate Commerce and Labor Committee, a panel stacked with senators who are major recipients of utility campaign contributions.

Among the committee’s stated concerns was uncertainty over how the changes to state law would affect Dominion’s 2021 rate review, a worry the 18 lawmakers’ letter to the SCC said a prospective analysis would address. 

“We are writing to you now in hopes that you can help resolve the General Assembly’s uncertainty and inform future legislation,” they wrote. 

“If the commission does conclude that future rates should be lower than the commission currently has authority to implement, the General Assembly could authorize the commission to set those proper rates in 2022,” the letter continued. “We are asking the commission to undertake this analysis now … so that all parties have a fair opportunity to present their best case for what future rates would be under the traditional cost-of-service model used for every other utility in Virginia.” 

Ware cited 2020 legislation committing Virginia to phase out fossil fuels in favor of renewables as another pressing reason to compare the outcomes of different forms of ratemaking. 

“This clarity for ratepayers is more important than ever with the dramatic costs coming with both retiring fossil fuel plants and the costly investments required by the (VCEA),” he said. 

During the 2021 regular session, Senate Commerce and Labor also agreed to ask the dormant Commission on Electric Utility Regulation, a group of six delegates and four senators that has not met since 2017, to discuss several of the reform proposals outside of the confines of a legislative session. 

Despite that agreement, the body has not announced any plans to reconvene since the legislature last adjourned on March 1.

Virginia Mercury is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Robert Zullo for questions: [email protected] Follow Virginia Mercury on Facebook and Twitter.

BREAKING: Del. Hala Ayala Accepts $100K Donation From Dominion Energy, Betraying Public Commitment
June 2, 2021

FOR IMMEDIATE RELEASE 

Diana Williams, Clean Virginia Communications Lead
[email protected], 540-836-8125 

BREAKING: Del. Hala Ayala Accepts $100K Donation From Dominion Energy, Betraying Public Commitment
Running for lieutenant governor, Ayala now the only statewide Democratic candidate to take campaign contributions from Dominion 

CHARLOTTESVILLE — Virginians learned this morning that Delegate Hala Ayala, candidate for lieutenant governor, accepted $100,000 from Dominion Energy despite publicly promising to refuse donations from the state’s largest electric utility monopoly. This has made Del. Ayala the only Democratic candidate running statewide to accept any campaign contributions from Dominion. Clean Virginia had previously supported Ayala’s campaign for the House of Delegates and contributed $25,000 to her current run for lieutenant governor based on her previous public commitment to refuse utility monopoly money. She reiterated this commitment in Clean Virginia’s candidate questionnaire for both the 2019 and 2021 election cycles. 

“In the final days of the primary campaign for Virginia’s lieutenant governor, with tens of thousands of votes already cast, Del. Hala Ayala chose to break a public commitment taking $100,000 from Dominion Energy and betraying the public’s trust,” said Clean Virginia Executive Director Brennan Gilmore. “Virginians should know that Del. Ayala chose to side with a corporate monopoly that has unjustly overcharged Virginians by $1.3 billion.”

In response, Clean Virginia will be launching a $125,000 statewide digital ad campaign in the final days of the lieutenant governor primary campaign to ensure that voters across the Commonwealth are aware of this broken promise and the harmful effects of decades of Dominion’s legalized corruption on everyday Virginians. Dominion has overcharged Virginians by more than $1.3 billion since 2015 and Virginia customers pay the 6th highest bills in the country. Yet, Dominion refuses to issue refunds and has even requested an increase to its authorized profit level from 9.2% to 10.8% as part of its rate review by the State Corporation Commission. If approved, this request would immediately raise bills even higher. 

“Del. Ayala’s actions are uniquely disappointing and deceptive – she has campaigned for statewide office on a promise to Virginians that she would hold polluting utility monopolies accountable and then accepted a massive contribution from Dominion Energy. That is not leadership — it is desperation,” said Clean Virginia Executive Director Brennan Gilmore.

Through the Clean Virginia Fund, Clean Virginia’s political action committee, Clean Virginia transparently and predictably gives to Virginia candidates or incumbents who refuse contributions from Virginia’s regulated utility monopolies (i.e., Dominion Energy and Appalachian Power Company) and their employed registered lobbyists and who do not own stock in those corporations. Del. Ayala denied accepting contributions in Clean Virginia’s 2021 Statewide Candidate Questionnaire: “I did not accept campaign contributions from Virginia utility monopolies or their employed lobbyist during any of campaigns, and I will not accept them while running for Lieutenant Governor.” 

Clean Virginia also contributed to the Lieutenant Governor campaigns of Delegates Glenn Davis (R-Virginia Beach), Elizabeth Guzman (D-Prince William County), Mark Levine (D-Alexandria),Sam Rasoul (D-Roanoke), and Sean Perryman.

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