House panel advances bills that could boost Dominion oversight
February 5, 2020

A House energy subcommittee on Tuesday night advanced several measures that could boost oversight over Dominion Energy’s profits and how much it can charge customers.

One measure, the “Fair Energy Bills Act,” would require that Dominion issue refunds to customers for any excess profits the company charged customers over the four year period ending in July.

In 2017 and 2018, state regulators found Dominion overcharged customers $379.7 million that would qualify for refunds in customer electric bills. Under a law passed in 2018, Dominion doesn’t have to issue refunds and can instead spend the money on improving energy generation and delivery. Dominion has indicated that is what it plans to do.

The bill would also give more flexibility to state regulators to raise or lower the rate of return that Dominion claims from capital projects. Right now, Dominion shareholders receive 9.2% in profits from the cost of developing projects like power plants or an offshore wind farm.

The proposal was introduced by Dels. Jay Jones, D-Norfolk, and Lee Ware, R-Powhatan.

“We as elected officials owe it to our constituents, who are the ratepayers, to do right by them,” Jones said.

Dominion Energy argued that the way the regulatory process was set up in 2018 allowed the utility to pursue investments in clean energy. The process Jones and Ware are proposing, Dominion Energy lobbyist John Rose said, “doesn’t have any incentives for the utility to come forward and be efficient.”

“It undoes everything that this assembly has tried to do and where you want energy to go,” he said.

Will Cleveland of the Southern Environmental Law Center, who argued in a regulatory case against raising Dominion’s rate of return, said the bill would ensure that the SCC has sufficient power to regulate the utility.

“As a monopoly, they are entitled to recover their costs, and they are entitled to earn a profit on those costs,” he said. “But, in the absence of competition, they are not entitled to earn excess profits, the rates we pay now are generating an unfair profit.”

Del. Mark Keam, D-Fairfax, also spoke on the limited power of the SCC after the 2018 utility reform.

“Right now, there is no way the SCC can request or mandate that you refund that,” Keam said to Dominion representatives. “You’re not going to write checks to customers on your own.”

The bill cleared the House Commerce and Labor subcommittee on energy on a 6-4 vote, with support from five Democrats and one Republican, Ware. It will go on to the full House Commerce and Labor committee.

The panel also advanced a bill introduced by Del. Suhas Subramanyam, D-Loudoun, that would restrict how utilities like Dominion cash out when they retire fossil fuel plants early — a goal for Dominion and state lawmakers.

Dominion is still recovering construction costs for some of those facilities; upon retirement, Dominion could claim its costs right away or over time.

Subramanyam’s bill would hand authority over that decision to state regulators, which would “establish a recovery period that best serves ratepayers.”

The Virginia Poverty Law Center and the Attorney General’s office of consumer protection support the bill.

Dominion opposes it, calling it a “dangerous precedent,” that undoes a utility legislative package passed the General Assembly passed in 2018.

“It would seem contradictory to want to decarbonize and complicate the retirement of fossil fuel assets,” said Bill Murray, Dominion’s chief lobbyist.

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The panel also advanced a proposal from Del. Rip Sullivan, D-Fairfax, that would levy annual renewable energy goals for Dominion Energy and widen the door for solar projects not run by state utilities.

The bill is a compromise between environmental groups, clean energy industry advocates and the utilities. It had not been finalized as of Tuesday night.

Sullivan asked the committee to clear the bill and allow for the language to be drafted before the full House Commerce and Labor Committee meets to take up the measure Thursday. The Senate will take up the same measure, sponsored by Sen. Jennifer McClellan, D-Richmond, on Sunday.

The original bill called on the utilities to sell 100% renewable energy by 2050 — a goal Gov. Ralph Northam set out over the summer. Sullivan said that the revised version might call for that target to be reached 2045.

Sullivan said the bill will include incentives for the state’s electric utilities that could mean “no new fossil fuel plants will be built in Virginia.”

One of those sweeteners may be a provision calling on the state utility regulators — the State Corporation Commission — to find a massive offshore wind project pitched by Dominion for the coast of Virginia Beach “in the public interest.”

The offshore wind provision is also in a standalone bill filed by Del. Cliff Hayes, D-Chesapeake. The provision would help Dominion secure the approval it needs from state regulators by tying the hands of the commission, which could not reject the project on the finding that it is not in the public interest.

Sullivan said his bill would not include a provision referring to the costs related to the project as “prudent and reasonably incurred.”

The bill also includes some provisions from a bill filed by Del. Lamont Bagby, D-Henrico, to aid low-income ratepayers.

Sullivan described the bill as an “incredibly far-reaching step, taking Virginia to the forefront of what is being done around the country.”

Climate activists with the Sunrise Movement, a progressive group, and others, opposed the bill, arguing that it has “no teeth” and does not go far enough to fight climate change.

They instead supported another bill filed by Del. Sam Rasoul, D-Roanoke, called the “Green New Deal Act.” That bill calls for a moratorium, effective in 2021, on the approval of facilities that generate energy using fossil fuels. The bill also calls for utilities to sell 100% renewable energy by 2036, and allows state agencies to sue utilities for non-compliance, and includes stiff civil penalties.

The panel passed Rasoul’s bill, but referred to it House appropriators amid lingering questions over implementation and costs.