Bipartisan Bill Looks to End Va. Electric Monopolies
RTO Insider
January 9, 2020

By Shawn McFarland

Dominion Energy might have finally met a “bill” it does not like.

Virginia delegates on Tuesday announced a bipartisan bill that would end the electric market monopoly in the state, allowing consumers to choose their electric provider and requiring distribution utilities to divest their generation. The legislation takes aim at Dominion, which serves two-thirds of the state’s consumers, and which the state Corporation Commission says has overcharged customers by $1.3 billion since base rates were frozen in 2015.

The bill was announced at a press conference by Del. Mark Keam (D–Vienna) and Del. Lee Ware (R–Powhatan) and endorsed by groups including the conservative R Street Institute and anti-poverty group Virginia Poverty Law Center. It’s the latest sign that Dominion will face tougher scrutiny from state lawmakers than it has in the past.

In December, Ware joined another Democrat in introducing a bill to reverse the General Assembly’s decision to freeze base rates for seven years, a change Dominion claimed it needed to ensure it could fund carbon emission reductions under the Obama administration’s Clean Power Plan. The CPP was cancelled by the Trump administration, which has proposed much less stringent regulations. (See EPA Finalizes CPP Replacement.)

“Over the past couple of decades, innovation and technological advancements have allowed consumers around the nation to choose when, where and how they obtain affordable and reliable energy. But in Virginia, we are stuck with a century-old business-as-usual model that benefits monopolies while suppressing competition and consumer choice. It’s time to reform the rules of the road,” said Keam. “We are done and are tired of ‘business-as-usual.’”

Under the current system, monopolies such as Dominion and Appalachian Power own and operate all segments of the state’s vertically integrated system, including generation, distribution and retail services. The bill announced Tuesday, which is set to be discussed in the 2020 General Assembly, would:

  • Establish a competitive market for electricity retailers to allow customers to shop on price or on environmental attributes (e.g., renewable energy);
  • Establish a nonprofit independent entity that has no financial stake in market outcomes to coordinate operation of the distribution system;
  • Remove existing interconnection and financing barriers to customer-owned energy resources; and
  • Add additional consumer protections and education to ensure smart energy choices.

Dominion and American Electric Power, parent of Appalachian Power, did not immediately respond to requests for comment.

“This legislation, which I trust will gain broad bi-partisan support, will chart a course toward engendering much-needed competition in the retail sales of vital electricity services,” said Ware. “This is a time of new opportunity.”

Keam and Ware claim Virginians have the seventh-highest electricity bills in the country. The utility has had its rates frozen since 2015 when the then Republican-led General Assembly removed state regulators’ ability to review base rates and set profit levels.

“It wasn’t until the rate freeze of 2015 that I came to the realization that this is really bad and really wrong. But only a handful of us said, ‘Why are we doing it this way?’ And the answers weren’t adequate,” Keam said. “So, from that point on until last year when we had that big fight over grid modernization, I think that’s awoke a lot of peoples’ understanding that we don’t have to take this.”

Dominion has long been one of the biggest political contributors in the state, having donated about $1.8 million in 2018-19 and $7.1 million since 2010, according to Virginia Public Access Project. In the past, most of the donations went to Republicans. In the most recent cycle, however, the utility donated slightly more ($949,000 to $870,000) to Democratic candidates.

But most Democratic legislative candidates agreed last year to reject funds from Dominion and made their opposition to the utility part of their campaigns. Nearly 50 of the 61 candidates that rejected Dominion money won their elections in November. With that, the Democrats took the majority in both the House and the Senate. The state’s governor also is a Democrat.

The bill proposed Tuesday is being backed by the Virginia Energy Reform Coalition, a group formed last year that includes both environmental organizations (Appalachian Voices, Clean Virginia and Piedmont Environmental Council) and right-leaning free market organizations (R Street Institute, Reason Foundation and Virginia Institute for Public Policy).

Devin Hartman, the director of energy and environmental policy at the R Street Institute, said the time is now for Virginia to embrace innovation.

“Virginia is shackled to a monopoly utility model that stifles innovation, increases costs and puts government in the difficult role of replacing competition,” he said. “It’s time for Virginia to liberate market forces, empower consumers and shift the role of government to facilitate competition. Competitive markets are the path to an innovative and consumer-friendly clean energy future. It’s time for Virginia to make the right choice.”