The Great Grid Grab

Who gets what from a Dominion-backed legislative package overhauling Virginia’s electric grid? At this point, there are more questions than answers.

Last week lawmakers friendly to Dominion Energy Virginia introduced sweeping legislation, The Grid Transformation and Security Act of 2018, which would increase investment in Virginia’s electric grid with the goals of increasing renewable energy, reducing power outages, and guarding against cyber-sabotage. Backers say the three-bill package also would restore rate-setting oversight by the State Corporation Commission after three years of a rate freeze, and return a cumulative $1 billion in refunds and rate reductions to customers over eight years.

The response from some of Dominion’s traditional foes was negative. Critics suggested that the legislation would neuter the SCC’s oversight powers even while nominally restoring them, thus allowing the utility to keep hundreds of millions of dollars due the rate payers.

“This bill is bad policy and dangerous, giving Dominion even more power over our lives and our future,” responded Tom Cormons, executive director of Appalachian Voices, a group that has helped lead the fight against Dominion’s Atlantic Coast Pipeline project, in a press release. “For far too long, the legislature has gone along with the monopoly’s plans, and it’s high time for our elected representatives to finally say ‘no’ to Dominion.”

In a Washington Post op-ed, Stephen D. Haner, a lobbyist representing the Virginia Poverty Law Center (and a frequent contributor to this blog), described the proposals as a “preemptive attack” on the SCC’s independence. “The outcome Virginia consumers should be hoping for is a return to full SCC authority and an almost immediate rate case to review the earnings during the recent regulatory holiday.”

However, environmental groups such as the Virginia Chapter of the Sierra Club, the Southern Environmental Law Center, and the Chesapeake Climate Action Network, which have combated Dominion over the pipeline, solar power, and coal ash disposal, have refrained so far from blasting the bill — at least in official statements. By packing environmental desiderata such as renewable power, energy conservation, electric vehicles, energy storage systems and microgrids into the bill, Dominion may have disarmed some of its critics.

The most comprehensive description of the package comes from Dominion. The summary that follows comes from an “overview” prepared by the company’s communications team.

Refunds and rate reductions. Refunds and rate reductions for rate payers  totaling more than $1 billion over the next eight years include:

  • $133 million in one-time credits.
  • $740 million in rate reductions achieved through elimination of the biomass rider and other riders.
  • $100 million annually from lower taxes resulting from the recently enacted federal tax reform.

State Corporation Commission oversight. The legislation restores SCC review of Dominion base rates but reviews base rates every three years instead of every two years, as it did before the freeze. The bill also adds SCC reviews before and after grid transformation investments are undertaken.

The legislation will reduce future riders (also called RACs, or Rate Adjustment Clauses), which are surcharges for new projects. States the Dominion summary: Before future riders can be added for new investments, the SCC will determine if there were overearnings. If there are overearnings, SCC will use them to offset the cost of future riders.

Grid transformation investments

The package allows for investments to build a more sustainable and resilient grid. These investments, summarizes the Dominion outline, aim to “reduce outages or restoration times, secure energy assets, enhance tools available to customers, and increase investments in renewable generation.” The investments can be grouped as follows:

Reliability investments

  • Automatically reporting of outages when they occur.
  • Prediction of certain outages before they occur so crews can be dispatched to equipment nearing failure.
  • Isolation of outages so fewer customers are impacted.
  • Reduction of voltage fluctuations to improve power quality for industrial and other customers.
  • Dispatch of crews more precisely to restore power more quickly.
  • Automated routing and restoration of service.
  • Better integration of renewable generation.
  • Installation of energy storage systems and microgrids
  • Strategic undergrounding of outage-prone lines.

Security investments

  • Cyber-security measures
  • Physical security and grid-hardening measures

Efficiency investments

  • Energy-efficiency and conservation tools, paired with smart meters, allowing customers to understand and manage energy use
  • Extension of the EnergyShare program through 2028, providing bill-payment assistance and energy upgrades to homes of low-income Virginians, the elderly, the disabled, and veterans.
  • Infrastructure for electric vehicles
  • Conversions of streetlights to LED lighting

Renewable investments

  • Utility-scale and small-scale solar, including expansion of rooftop leasing solar program
  • Large-scale wind projects
  • An energy storage pilot program
  • Pumped hydroelectric storage facilities

These descriptions are not specific and, as the saying goes, the devil is in the details. There is no indication of how aggressively Dominion will pursue these investments, and Dominion provides no estimate of how much they would cost.

“The legislation envisions that a large portion of the financial support for grid modernization and renewable energy development would come from rates already paid by Virginia electric customers,” writes Robert M. Blue, CEO of the Dominion Energy Power Delivery Group, in an op-ed in the Richmond Times-Dispatch today. But the column provided no supporting detail.

An obvious question: Dominion has deferred action on large-scale offshore wind projects due to the high cost of building two test turbines off Virginia Beach needed to determine how well the windmills hold up under severe weather conditions in the Atlantic Coean. Would the proposed bills declare construction of the test turbines at a cost of several hundred million dollars to be in the “public interest,” thus overriding the skepticism of SCC staff?

Another: Dominion has sought SCC approval for multi-hundred million-dollar investments to bury distribution lines prone to outages during storms. While the commission has approved limited investments, it has rejected the utility’s more ambitious plans on the grounds that it had not documented that the benefits were worth the cost to customers. Would this legislation override previous SCC rulings?

And one more: Environmentalists have long sought legislation that would make it more lucrative for homeowners and businesses to install rooftop solar. Dominion and other electric utilities have insisted that any such law require them to pay a grid-access fee to help cover the cost of maintaining the electric grid. Failure to resolve this fundamental disagreement has stymied efforts to promote rooftop solar. What would this legislation package do that previous bills did not?

Bacon’s bottom line: It strikes me that it is way too early for anyone to declare themselves for or against this legislation. Too many questions need to be answered. Hopefully, members of the General Assembly will trouble themselves to find answers before declaring their support of or opposition to the bills on a purely partisan or ideological basis.

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18 responses to “The Great Grid Grab

  1. Aint buying it. Give me Petersen’s bill. At least we would get back everything, not BS laws. Shoot this down the way they shot us down, dump these too long in the GA guys and get people who enact laws where the taxpayer gets what they deserve.

  2. “Hopefully, members of the General Assembly will trouble themselves to find the answers before declaring their support of or opposition to the bills.”

    Not a chance, these bills have been bought and paid for, it is simply a matter of how many votes they pass by.

  3. rate setting oversight will not be restored, as dominion will be able to keep all their overcharges for “investing”.
    this bill is straight up theft.

  4. The first thing you need is the names of the folks who wrote it and let them field questions.

    Next.. it reads like regulations and the devil-in-the-details is whether the legislation says for the bullet items .. “Dominion SHALL DO” versus “Dominion MAY do” is nothing.. it’s like saying Higher Ed has to provide “affordable” tuition so we need to know who wrote the legislation and what their INTENT is – and is not.

    You might say it’s too early to take a position…. but the process here is wrong because we don’t have any assurance what-so-ever how the questions are going to be answered if at all.. and that’s not a good process and people SHOULD be opposed to this process… where the devil-in-the-detail questions don’t get answered or you find out after the legislation is passed.

    I’ll save DJ the effort. This is the same old same old Va GA NOT doing a legitimate process…

    • “The first thing you need is the names of the folks who wrote it and let them field questions.”

      It was written by Dominion and/or their lobbyists. The upper right hand corner of the bill says, “Legislation Not Prepared by DLS”. DLS is the Department of Legislative Services. The group, within the General Assembly, that actually writes the words of a bill. At least, in most cases. They didn’t write this bill. And, since it was not submitted in purple crayon, I feel confident that neither of its sponsors wrote it either. Hat Tip on that to Blue Virginia.

  5. The trouble with systematic corruption such as that found in Virginia’s state government is that the corrupt begin to sing in tune. For years we’ve been told by the right and the left, Democrats and Republicans alike, that Virginians pay some of the lowest electricity rates in the country. Against that backdrop it’s harder to get very excited about the shenanigans of Dominion and our General Assembly. However, I’ve just come across a recent study that calls the claim of Virginia’s electrical utopia into question.

    http://www.vplc.org/wp-content/uploads/2017/05/VPLC_EnergyReport.05032017.pdf

    The study contends that while Dominion may provide low base rates to Virginians those base rates only constitute 60% of what the utility charges for residential electricity. Once the other 40% is factored into the equation Virginians have the 10th highest electrical bills in the United States.

    I guess Goebbels is the patron Nazi of the Virginia General Assembly.

  6. I agree with Jim Bacon’s bottom line stated above: “It strikes me that it is way too early for anyone to declare themselves for or against this legislation. Too many questions need to be answered.”

  7. Wagner and Saslaw’s bills are posted, SB 966 Electric utility regulation; grid modernization; energy efficiency programs; schedule; rate review and SB 967 Electric utility regulation; grid modernization; energy efficiency programs; schedule; rate review, respectively. Wagner’s appears to match Kilgore’s word for word, Saslaw’s does not.

    Seems like a setup for a Conference Committee hatchet job.

    • I believe you’re correct that these will go to conference to allow for maximum time to tweak and pretend to respond to objections that will be raised.

      Wagner’s bill is close, but doesn’t quite match Kilgore’s. The 50 MW of distributed generation isn’t in Wagner’s bill. But his does require the SCC to write yet another report that Kilgore’s doesn’t. Because we all know there needs to be one more report that no one will read.

  8. If it ends on the Gov’s desk, we know how it ended last time with the rate freeze. Gov McAuliffe said he had met with Dominion top brass and they pleaded with him that they simply had to have a rate freeze, so he agreed as long as they built 500 MW of solar.

  9. Having worked in the utility and carrier regulatory arena for 40 years, I’m not opposed per se to trying different tweaks to the basic model. Getting some of these improvements are of benefit to ratepayers. Making the distribution system more reliable is a good example of something that could benefit ratepayers. Fewer and shorter outages are important. Ergo, one might be able to justify forgoing a return of an amount of excess profits equal to the new investment.

    But the analysis cannot stop there. The amount of investment must be recorded as fully recovered capital from day one. Dominion should not be permitted to put any of these investments in lieu of refunds in its rate base. It must not be allowed to earn a rate of return on this investment, which is zero cost capital. Similarly, it cannot be allowed to recover depreciation or amortization of this capital.

    I’m not done yet. If, for example, Dominion invests in more durable distribution lines that reduce outages, Dominion’s projected expense for outage restoration needs to be reduced. For example, if the investment allowed Dominion to project 5% fewer outages, its restoration costs should be reduced by 5%. In my view, if done correctly to protect ratepayers, there may be room for some horse-trading.

    What I fear the most is Northam will pull another McAuliffe and give up some refunds or offsetting investments for some amount of “renewables” that are less expensive than the other investments. The environmental groups do not have the same interests as consumers.

  10. Several of you understand this better than most of the legislators. (Unless some of you with pseudonyms are legislators…..) I wish the bill(s) were in this committee!

    • The IQ of this “committee” in on average, significantly higher than that of the House and Senate Commerce and Labor Committees. I will leave it to you to guess who drags down the average on both.

  11. Perhaps we should form a Commonwealth of Virginia Bacon’s Rebellion Political Party. Perhaps Big Bacon runs for Governor. Given that he is a sure winner, then his cabinet can be divied up between Ackbar, Rippert, TMT, Haner, TBill, Mom, Andrew, and Larry the G.

    Then we all can sit back, watch, and critique.

    The sun then will shine on the Commonwealth, things like free electric power, and free education worthy of Socrates. Folks like Jeff Bezos will come running for a seat at the bountiful table of fruits, breads, and honeys galore, plus fast and free transit everywhere to shining cities on hills at a snap of one fingers.

  12. Still wonder if ALEC had a role in writing this legislation and other.

    “ALEC’s Influence over Lawmaking in State Legislatures”

    https://www.brookings.edu/articles/alecs-influence-over-lawmaking-in-state-legislatures/

    No matter where you personally stand on issues.. left or right … and on energy and electricity issues – .. what goes on in the Virginia General Assembly – you should KNOW .. WHO wrote proposed legislation. y=

    You should KNOW the name of the people who actually wrote it and what their affiliations are.

    For some time now ALEC has been involved in helping to write legislation in the states, including Virginia and every piece of legislation proposed – people have the right – the responsibility to KNOW the views of the people who wrote it.

    Legislation written by Dominion would be very different from legislation written by.. say the Southern Poverty Law Center. No matter where you fit in to the political continuum.. all of us need to know who wrote legislation finding it’s way through the legislative process.

    GOOGLE ” Virginia ALEC Politicians – SourceWatch”

    and you’ll see some familiar names

    these are Virginia legislators with ties to ALEC – and ALEC writes model legislation that becomes the starting point for many bills in state legislators.

    again – it’s not whether you are pro or con on an issue – it’s do you know who wrote the legislation and what their philosophy is with regard to the subject of the legislation.

  13. No. This is not an ALEC bill. The disclaimer from DLS means it was written by Dominion’s own counsel. The simple explanation is usually correct. Plenty of law firms routinely write bills and hand them to patrons. I have written short bills only (not a lawyer.) I think that disclaimer only shows up if the patrons hand them in and say “use as is” and the DLS staff doesn’t get to vet them.

  14. Thanks Steve. I THOUGHT that any legislation had to be written with respect to how it would be ultimately appear in the Va Code.

    As you probably know – the Va Code is a rats nest..that probably only a few really know how actually implement the intent of a bill.

    That’s part of what I thought was DLS role.. in vetting… i.e. they don’t change the intent of the legislation but they know how it has to be inserted into the code .. and how it is written has to be with respect to how it is put into the code.. or am I off into LA LA Land?

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