By Steve Haner
In a matter of weeks, Dominion Energy Virginia is expected to initiate the long-awaited review of its revenues, expenses, and profits in front of the State Corporation Commission, the first since 2015. A series of bills in recent years has set rules for that process which constrain the SCC’s discretion and fix the game in the utility’s favor.
Behind the smoke and mirrors, Dominion’s goals were clearly discernable: Despite growing profits, prevent any reduction in base rates. Keep the base rates unchanged even though more and more operating costs were being moved over to activity-specific rate adjustment clauses. Limit or eliminate the threat of major refunds to customers. Somehow, every bill ended up accomplishing those things for the utility.
Efforts in 2020 to return the regulatory rules to their pre-2007, or even pre-2015 status, and restore some lost SCC flexibility, were mostly unsuccessful. Is it therefore too late to change a rate case about to start? Bills that pass in the 2021 General Assembly go into effect in July, unless they are emergency bills that need super majority votes. There likely is not a super majority ready to dismantle the Rube Goldberg machine built to protect Dominion’s stockholders.
But a simple enactment clause may be able to reach back and change the rules on the rate case. It was attached to a successful bill in 2020 and the SCC recognized the statutory change in the similar rate case for Appalachian Power Company, which also had begun before the July 1 enactment date. If the General Assembly clearly expresses an ex post facto intent, it can be valid.
That enactment clause included reads:
- That the provisions of this act shall apply to all triennial proceedings under § 56-585.1of the Code of Virginia, as amended by this act, including the first triennial review proceeding conducted after January 1, 2021, by the State Corporation Commission for a Phase II utility, as that term is defined in subdivision A 1 of § 56-585.1of the Code of Virginia, as amended by this act.
Virginia’s legislative shift blue has been accompanied by increasing hostility to Dominion and other utilities, and now two of the three SCC judges have been installed under Governor Ralph Northam. More and more Republicans are also less inclined to defer to the utility, in part because it has fully embraced the race to build those massively expensive renewable power plants. SCC estimates of future consumer costs have also created concerns.
So, it is worth watching what happens this year. Below are some of the pending bills:
- House Bill 2049. This bill from Del. Jeff Bourne, D-Richmond, would eliminate the Customer Credit Reinvestment Offset created in 2018. The CCROs allow the utility to use any excess profits on capital projects rather than giving refunds. Since we’ll be paying more for the new renewable projects on the way without the CCROs, this may not help consumers much.
- House Bill 1984. This bill from Del. Sally Hudson, D-Charlottesville, seems to increase the discretion of the State Corporation Commission as it reviews a utility’s finances and decides what to do with future rates. This is probably a good step, although the best approach would also give the SCC discretion over what types of generation gets built. I do next expect this General Assembly to get rid of all the renewable energy mandates it imposed.
- House Bill 2057. This is a reprise of the bill Del. Lee Ware, R-Powhatan, introduced last year. Again, it seeks to increase the SCC’s discretion and remove some of the handcuffs slapped on by previous General Assemblies. With the reservation that I haven’t fully read it again, it has great merit.
- House Bill 2200. Last year Del.Jay Jones, D-Norfolk (and now candidate for Attorney General) shared sponsorship of a bill with Ware. Now he has his own, similar version, but it would take a careful comparison to see if there are subtle differences.
- House Bill 1835. This more narrow bill from Del. Suhas Subramanyam, D-Loudoun, removes a cap on any monetary refunds that the 2018 General Assembly imposed at the request of Dominion Energy Virginia. Anything that restores the SCC’s traditional powers is moving in the right direction.
- House Bill 2160. This bill from Del. Kathy Tran, D-Fairfax, removes a constraint on SCC authority that goes all the way back to the 2007 legislation. It would allow the SCC to order refunds of 100% of any excess earnings it recognizes following its audit of Dominion Energy Virginia, among other changes.
This would be a hard lift in a full session, and this is the short-short session, with the first bill action deadline now less than three weeks away. Odds are that there are conflicts within these bills so sorting everything into one omnibus with enough consensus to advance will not be easy. Dominion is expert at the divide- and-conquer game.
In the past, Dominion has averted this threat by working with the environmental movement, giving them what they things they want in exchange for selling out consumer protection. The 2020 Virginia Clean Economy Act handed the environmental groups most of the carrots they sought, and maybe this time they will instead wield the stick.
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