What does this bill do?
- The Fair Energy Bills Act restores the historic regulatory authority of the State Corporation Commission (SCC) for Dominion Energy’s 2021 rate case.
- It empowers the SCC to examine Dominion Energy’s earnings, set its allowed profit level, and direct the monopoly to lower rates and issue refunds if it overcharges customers.
- It changes no other part of the SCC review process and does not prevent funding for projects authorized under the 2018 Grid Transformation and Security Act.
Why is this bill needed now?
- Dominion Energy has overcharged Virginians by more than $1.3 billion since 2015, according to SCC reports.
- Because of a 2015 law that froze the monopoly’s base rates until 2021, the SCC has been unable to compel Dominion to refund any of these overcharges or lower base rates to prevent future overcharges.
- Virginians currently pay the 7th highest residential energy bills in the nation — bills that, for Dominion’s customers, no longer reflect the monopoly’s cost to produce and distribute energy.
- For 75% of Virginian households, the amount of income spent on electricity is considered unaffordable by federal standards. Likewise, many of Virginia’s large businesses have sought relief from high energy bills at the SCC, which found that their complaints had merit but required legislative solutions.
- In 2021, Dominion is scheduled to have its first base rate case in nearly a decade. A base rate case is meant to be the Commission’s opportunity to set a utility’s rates at a level that allows them to recoup full operating costs plus a fair rate of return. Recent laws have seriously curtailed this authority.
- The 2021 rate case will be unprecedented in scope: the SCC will examine four years of Dominion’s overcharges (2017-2020) and set Dominion’s rates and allowed profit level going forward. Dominion’s next scheduled case is in 2024, meaning that billions of Virginian dollars are at stake in the 2021 ruling.
- The 2020 legislative session is the last chance the General Assembly has to restore the SCC to its proper, traditional regulatory authority before the 2021 rate case.
Key policy changes:
- Removes an existing provision prohibiting the SCC from lowering Dominion’s base rates by more than $50 million, a restriction that has no public interest justification.
- Allows the SCC to use traditional “cost of equity” analysis to determine Dominion’s allowed profit level, setting the monopoly’s rate of return based on the amount that is needed to attract capital. Since 2007, Virginia law has mandated the SCC use “peer group” analysis, which instead artificially sets Dominion’s rates based on what other monopolies in nearby states earn.
- Removes the “refund ceiling” that prohibits the SCC from refunding 100% of overcharges to customers. Under current law, the SCC can only compel Dominion to refund 70% of any overcharges over 0.7% above its authorized rate of return to customers.