Dominion oversight restored
Legislation will ensure utility rates receive proper scrutiny once again
Given the fact that the Republican-led House of Delegates and the Democratic-led Senate failed to reach agreement on a host of issues in this year’s session, legislation that will strengthen oversight of Dominion Energy stands out as an impressive achievement.
It’s not yet clear how much customers will benefit, though the company says that most bills will decrease by $6-7 a month as a result. Certainly that would be welcome if it materializes, but the bigger win here was the restoration of regular rate reviews, which will ensure the type of scrutiny needed to protect ratepayers.
Dominion Energy has always been willing to play by the rules, though Virginia’s de facto power monopoly usually had a hand in writing them. Every General Assembly session, it seems, involves some effort by the utility to tweak the regulations under which it operates. Dominion has generously offered guidance to lawmakers drafting the bills — and donated millions to their campaigns.
The most significant of these happened in 2015 when the General Assembly, at Dominion’s behest, enacted a rate freeze and ended regular reviews conducted by the State Corporation Commission. Previously the SCC opened Dominion’s books every two years and had the power to set the rate that struck a balance between the cost to customers and the company’s revenue.
Dominion sold the change as a way to comply with the Obama administration’s Clean Power Plan, which intended to reduce greenhouse emissions from electric generation, arguing that the rate freeze would enable Dominion to pay for the transition
to clean-energy sources.
When the Trump administration moved to repeal the Clean Power Plan, Dominion changed its tune and argued that the money set aside as a result of the rate freeze would instead be used to modernize its infrastructure. At the time, the company had collected between $300 million and $700 million for Clean Power Plan compliance.
Regular reviews by the SCC, an independent branch of state government, would have returned that money to ratepayers through refunds and rate adjustments. But
without that power, Dominion was free to overcharge customers without penalty.
The legislature revisited regulatory reform in 2018, ordering Dominion to return some of that money to customers and resuming SCC oversight, sort of. Reviews would occur every three years, instead of the previous two, and directed the SCC to consider spending “deemed in the public interest,” “deemed reasonable and prudent” or “deemed cost effective,” as then-Del. Mark Keam outlined in a Washington Post column.
Testimony to the SCC in 2021 contended the utility had, by then, overcharged customers by $1.2 billion since 2015, while Virginians were paying the sixth-highest power bills in the nation. Something had to change.
This year, mercifully, something did. Gov. Glenn Youngkin in October called for resuming SCC rate reviews when he rolled out his administration’s energy plan, drawing support from environmental and clean-energy advocates. Bills proposed in the General Assembly went through several rewrites, with input from the governor, large ratepayers and, naturally, Dominion representatives.
The deal they reached, which won near unanimous approval, slightly boosted the company’s profit margin from 9.35% to 9.7%, but reestablished SCC reviews every two years. That will better protect Dominion customers and ensure the utility receives the sort of scrutiny it has too long avoided. It also kept intact the provisions of the Clean Economy Act, which moves Virginia toward zero carbon emissions by 2050.
There are still hurdles to clear, most notably the ongoing dispute between Democrats and Republicans over appointments to the SCC. And though the bill will roll $350 million of “riders,” or additional charges on a customer’s bill, into the base rate, whether that actually delivers lower power bills as Dominion contends should be closely monitored.
But there is no question that this is a substantive improvement to the previous system. The governor and lawmakers deserve credit for setting aside their differences on this issue and delivering for Virginians.