Strengthen oversight of utility rates
Lawmakers should return power to the State Corporation Commission to ensure fair pricing
Acritical mass appears to be forming over how to better regulate utilities in Virginia in order to reduce costs for customers, who in 2019 paid the nation’s sixth-highest energy bills according to the U.S. Energy Information Administration.
While a work in progress, it is a necessary step toward reining in Dominion Power, which has benefited from a generously written regulatory framework at the expense of Virginia families.
Last Monday, Meade Browder, the head of the utilities regulatory division of the attorney general’s office, argued in support of legislation that would strengthen oversight of Virginia’s power companies, restoring authority stripped from the State Corporation Commission in 2015.
“We’ve been aggressively representing ratepayers’ interests before the SCC for many years, but we’ve done so with one hand tied behind our back,” Browder told lawmakers, according to the Richmond Times-Dispatch. “And that’s due to legislation over the last six or seven years ... that’s been drafted by Dominion to serve Dominion’s purposes, rather than having the regulator regulate on a level playing field.”
This may seem like a stern rebuke to what is effectively the commonwealth’s power monopoly, but it would instead mark a welcome return to the type of thorough and needed oversight of utilities that would help protect the public.
It used to be that the SCC conducted biannual reviews of utilities that looked at a company’s books — its earnings, spending and utility rates — with an eye toward protecting customers’ interests. The companies could be profitable, of course, but the law required that profit greater than 10% must be returned to ratepayers (i.e. — you).
That ended in 2015. The Obama administration was pushing its Clean Power Plan that would have increased costs for utilities such as Dominion. The company successfully urged state lawmakers to suspend regular SCC reviews. In exchange, the company would freeze its base utility rate for customers and prepare for the expected cost of complying with federal regulatory changes.
Of course, the Obama Clean Power Plan went up in smoke when a new administration took office in 2017. But that sweetheart deal remained on the books, meaning that Dominion enjoyed a huge windfall as stricter federal rules never materialized.
A report by the SCC last year found that Dominion collected $502 million in “excess” profits from 2017-19. During that same period, the average power bill paid by customers jumped “$26.10 (28.81%) from July 1, 2007, to July 1, 2020,” according to the SCC.
For its part, Dominion says it is using that money for investments in clean energy, including “energy storage, nuclear relicensing, transmission, distribution undergrounding, distribution grid modernization, and renewable-enabling quick start generation,” again according to the SCC.
But suspending regular SCC regulatory review rendered that agency all but toothless to protect customers. And while Dominion is right to work toward a clean-energy future — something most ratepayers support — the absence of oversight is troubling, especially when the company has a de facto monopoly on the market.
Dominion has for years treated the legislature as its playground, pouring money into the campaign coffers of state lawmakers from both parties and reaping the benefits of those investments through favorable legislation. The 2015 law was the most egregious example.
In recent years, a new generation of lawmakers have rejected Dominion’s contributions and sought to expel the company from the political process. They have moved bills hostile to the utility and sought to establish a regulatory protocol that better serves consumers, not shareholders.
There is worry the pendulum may swing too far, but it’s certainly welcome to see Virginia putting people, families and ratepayers first. Yes, Dominion has a duty to its shareholders, but fair pricing and bills more in line with the national average ensures affordability while still maintaining a healthy profit margin.
Restoring balance to this relationship should be a priority in Virginia, and the legislation before the legislature should help provide it. This is a welcome, if overdue, move for the commonwealth.