FOR IMMEDIATE RELEASE
Cassady Craighill, Clean Virginia Communications Director
[email protected], 828-817-3328
Dominion’s Troubled First Quarter
Public pressure and legal rulings stalling utility’s attempts to claim lost revenue and build Atlantic Coast Pipeline
Richmond — A failed attempt to scale down energy efficiency spending, continued legal problems with its proposed Integrated Resources Plan, a series of legal rulings that have delayed and inflated costs of the Atlantic Coast Pipeline, and a wave of Virginia elected officials and political candidates refusing the monopoly’s political contributions dominated Dominion Energy’s first quarter in Virginia. Dominion reported an unaudited net loss of $680 million during the first quarter of 2019, despite operational earnings of $873 million during that time, a $132 million increase from their 2018 Q1 earnings.
“The real story for investors about Dominion’s first quarter performance is its ballooning toxicity in the political arena,” said Clean Virginia Executive Director Brennan Gilmore. “More and more Virginia legislators and candidates are refusing Dominion’s contributions, thanks in large part to demands from voters for politicians to sever their financial ties to monopoly utilities. Dominion’s reliance on political influence to pass preferential legislation is an unsustainable business model that will end up hurting shareholders in the long run.”
As part of negotiations to pass the 2018 Grid Transformation and Securitization Act allowing Dominion to continue withholding approximately $300-400 million each year in consumer overcharges, Dominion made a $870 million commitment to new energy efficiency projects. In March, it filed a request with the State Corporation Commission to decrease that commitment, claiming a loss in projected revenue if it increases the efficiency of its systems. Dominion CEO Tom Farrell bowed to public pressure, including a letter from Governor Ralph Northam, in late March and agreed to spend the full $870 million on energy efficiency programs that Dominion had promised legislators.
Dominion’s Integrated Resources Plan (IRP) has also faced serious legal scrutiny this quarter. The company submitted its revised IRP to the State Corporation Commission (SCC) for approval in early March, after the SCC rejected — for the first time ever — Dominion’s original IRP filed in December 2018 for failing to be “reasonable and in the public interest.” At Dominion’s shareholder presentation on the New York Stock Exchange two weeks after its revised IRP submission, the corporation outlined $17 billion in new infrastructure spending in Virginia from 2019 to 2023 which would increase base rates by 40% in just four years. This increase is at least $3.3 billion more than what Dominion told the SCC in its revised IRP submission. In the same shareholder presentation, Dominion stated it expected an average 10.2% return on equity on these investments. In response, the SCC filed a motion to compel evidence from Dominion to address the discrepancy and a group of Virginia House Delegates called for transparency from Dominion as well in a press release this week.
Dominion saw costly roadblocks to Atlantic Coast Pipeline construction after the Army Corps of Engineers, the National Park Service, and the Fish and Wildlife Service revoked permits, and a federal court last year rejected a major permit for the pipeline to cross the Appalachian Trail. Investors may never see a return on the Atlantic Coast Pipeline in part due to Dominion’s executive leadership’s improper assessment of the regulatory and political risks in attempting to build major pipelines.
Dominion also faced serious setbacks during Virginia’s legislative session this quarter. The House of Delegates passed a bipartisan bill that sought to establish clearer rules on pipeline cost recovery, requiring corporations seeking to recover pipeline costs from Virginian ratepayers to prove that there was a demonstrable need for energy and that a pipeline built to meet this need was the most cost-effective way to meet the demand at the time the contract was signed. This bill garnered support from a diverse group of advocacy organizations including the Virginia Tea Party and Appalachian Voices.
To date, 35 sitting members of the Virginia House of Delegates and State Senate refuse campaign contributions from regulated utility monopolies, a number that is expected to grow before General Assembly elections in November.
Cassady Craighill, [email protected], 828-817-3328
Clean Virginia is an independent advocacy organization working to advance clean governance, clean energy, and clean competition by fighting monopoly utility corruption in Virginia politics.