If you want a good cross-section of the issues swirling around the move to re-regulate the electric power industry, read Michael Shear’s article today in the Washington Post, and then my column, “Power Politics,” in Bacon’s Rebellion. Shear emphasizes the conflict between power generators and electric customers over how electric rates will be determined. I focus on Dominion’s rationale for wanting to re-regulate the industry in the first place, and then discuss the issues that aren’t getting talked about… but should.
Here’s the Cliff Notes version of my column: Electricity consumption in Virginia is increasing. Dominion, which has been importing electricity from out-of-state to meet rising demand over the past decade, now wants to build new power plants to ensure “energy independence” for Virginia. To compete in the financial marketplace to borrow some $4 billion over the next decade or so, Dominion wants the security that goes with a regulated Return on Investment for its power plants. Dominion submitted its preferred legislation late last year, which is now being chewed over in the legislative process by the other vested interests: the power companies, the industrial customers and the citizen rate payers.
The resulting “hybrid” regulation — regulation lite, with financial rewards for Dominion to continue pursuing cost savings — will represent a evolutionary change from the status quo. What’s not getting serious consideration is anything that would encourage (a) conservation and energy efficiency, (b) a move from “Big Grid” power plants and transmission lines to a system of distributed generation, or, despite a rogue legislative proposal, (c) a move to renewable energy sources.
Virginia’s legislative process is designed to sort out the differences between the major vested interests, making sure that nobody walks away too happy. What’s entirely missing is a vision for Virginia’s energy future.