An electric rate freeze is good for Virginia
It’s counterintuitive. If we could keep the cost of rent, groceries and other household monthly expenses the same for five years, most of us would welcome the stability. So why are two Northern Virginia political figures — former attorney general Ken Cuccinelli (R) and Sen. J. Chapman “Chap” Petersen (D-Fairfax) — challenging a law that freezes Dominion Virginia Power’s base rates?
The Virginia General Assembly passed a law in 2015 to protect customers from a potential price spike tied to environmental costs. Since then, the typical Dominion residential customer has paid $1,100 less per year for electricity than those elsewhere in the Mid-Atlantic. Rates were frozen at a level only 4 percent higher than they were more than five years ago.
Dominion’s electric service and reliability are at an all-time high. Expenses associated with major storm repairs and significant environmental costs were shifted from customers to Dominion shareholders.
While some Virginia politicians claim that Dominion customers are paying too much, a quick comparison tells a different story. Northern Virginia’s neighbors in Maryland and the District of Columbia have significantly higher rates. Residential customers in Maryland pay 25 percent more than Dominion Virginia Power’s customers. Industrial rates in Maryland are 49 percent higher. In the District, residential rates are 11 percent higher, and industrial rates are a whopping 68 percent higher.
No wonder large electric users such as data centers overwhelmingly locate in Virginia instead of the District or Maryland. In fact, the U.S. Energy Information Administration found that Virginia’s commercial and industrial rates are among the lowest nationwide.
Still, Petersen and Cuccinelli maintain that the freeze should be scrapped. They contend that the rationale for the freeze, protecting customers from the cost of compliance with the federal Clean Power Plan, is gone. They argue that the plan itself is now dead, given the recent changes in Washington.
Nonetheless, the Supreme Court has already ruled that greenhouse gases are regulated pollutants under the Clean Air Act. Similarly, the Environmental Protection Agency issued an endangerment finding related to greenhouse-gas emissions. The current administrator indicated in his confirmation hearings he had no plans to revisit the issue. The uncertainty of the Clean Power Plan, if anything, has only increased since 2015.
The 2015 rate-freeze legislation did more than promote stable electricity prices and reliable service. It also required an increase in energy assistance for low-income customers — seniors, military veterans and others — funded by Dominion shareholders. Gov. Terry McAuliffe (D) made clear he wanted the program to be the best in the country, and it is. Dominion delivered $57 million to help people who need it. The program pays to weatherize homes to save money and energy over the long run, and provides emergency assistance to pay overdue energy bills.
An additional $85 million went to reducing the bills of all customers by requiring the company to write off higher fuel expenses from the 2014 “polar vortex.”
And the law helped to build nearly $1 billion of new solar energy projects now contributing to Virginia’s power grid. That’s enough to power 100,000 homes. The majority of this solar capacity is being built at little or no cost to most Dominion customers, because specific large customers are footing the bill.
Virginians are benefitting from the 2015 law. Base rates are stable and won’t change for five years. We have cleaner energy and cleaner air with the development of more solar and renewable energy. Investments and programs are helping vulnerable customers better manage their energy costs. It’s a win all around.