The Dominion Energy-backed legislation that overhauls how Virginia regulates its two large electric utilities — including more spending on energy efficiency, grid upgrades and renewable energy projects, though at the price of unfettered state oversight of base rates, opponents contend — could be headed to Gov. Ralph Northam’s desk by the end of next week after making big strides Monday.
The Senate version cleared the House of Delegates on a 65-30 vote, with three abstentions and two other delegates not voting. Voting against Senate Bill 966 were 12 Republicans and 18 Democrats, including some freshman lawmakers who had sworn off donations from Dominion, a political heavyweight that is Virginia’s top corporate donor to campaigns.
One of them, Del. Lee Carter, D-Prince William, called the utility overhaul “the definition of a Christmas tree” bill, with “all kinds of gifts” for various interests.
“This should not be how we make legislation,” Carter said.
Later that afternoon, the House version, House Bill 1558 by Del. Terry Kilgore, R-Scott, advanced out of the Senate Commerce and Labor Committee and now heads to the Senate floor.
“Today’s two legislative votes move us that much further along in giving $200 million in rate credits back to customers, accelerating additional money from federal tax cuts and building a smarter, safer, greener grid system for Virginia,” said Dominion spokesman David Botkins.
The bills are now identical, but each chamber will have to adopt amendments added by the other. However, it could end up on Northam’s desk by the end of next week.
“We have a mechanism included in the bill to invest in the grid and renewables without raising rates,” Kilgore said on the House floor.
Since the 2015 rate freeze law that halted the ability of regulators at the State Corporation Commission to issue customer refunds, Dominion has racked up hundreds of millions of dollars in excess earnings. Appalachian Power, Virginia’s other large utility, has received a smaller windfall.
After announcing in December that it was time to move away from the rate freeze, Dominion has pushed lawmakers to adopt a “reinvestment model,” in which the company’s profits above its authorized rate of return are used to pay for modernizing the electric grid and building more renewable energy such as wind and solar power.
The ever-morphing bills, carried by the utility’s allies in the House and Senate, have been among the most hotly debated pieces of legislation in the session this year. Along the way, the company has faced stiff opposition from lawmakers of both parties, environmental and consumer groups, some large industrial electric customers and the Virginia Attorney General’s consumer counsel office. Changes along the way, including provisions boosting customer credits for past overpayments, more energy efficiency spending and rate cuts for large industrial users, among other sweeteners, have converted some opponents to supporters or neutral parties.
The legislation also includes a pilot program that pushes the State Corporation Commission to allow Dominion to put underground a controversial transmission line intended to power an Amazon data center in Haymarket that has been fiercely opposed by locals, who have succeeded in persuading the commission to hold a new hearing on the need for the project. Though many of her constituents have pushed for the line to be built underground, which the commission has previously rejected as too expensive, Del. Danica Roem, D-Prince William, voted against the bill.
“My constituents have overwhelmingly asked me to vote against this bill,” Roem said, adding that the language of the bill doesn’t prohibit future overhead transmission lines in the corridor nor does it require Dominion to participate in the pilot underground program.
Gov. Ralph Northam’s office convened mediated talks to hash out various provisions before ultimately giving the bill his blessing. And earlier this month, Del. David Toscano, D-Charlottesville, got an amendment inserted into the House version that was aimed at thwarting a “double-dip” by the utilities: namely, using spending on eligible projects to offset refunds and then including those projects in the utility rate base on which the companies earn a return. The commission and other opponents said the provision was tantamount to forcing customers to pay twice.
Though Dominion officials initially said they didn’t see a way to spend money on the grid upgrades, renewable power and other eligible projects and not include them in the rate base, a mechanism emerged, Dominion lobbyist Jack Rust said.
“It evolved on the floor of the House,” Rust said.
Though once approved and built the projects will be included in the rate base, they will be taken out during the three-year periods the legislation creates for the review of utilities’ base rates and earnings, Rust said, with money that would have gone to refunds paying off the projects in full.
While their numbers have dwindled, opponents remain, chief among them the Attorney General’s consumer counsel, some large industrial electric customers and Appalachian Voices, an environmental nonprofit with an office in Charlottesville.
“It does not restore the SCC’s authority to reduce excessive base rates,” said Ed Petrini, an attorney representing large industrial customers.
The legislation also pushes the commission to approve $200 million a year for Dominion to spend on putting outage-prone distribution lines underground, a program the commission has largely rejected in the past few years as too expensive.
In a letter to Toscano last week, Arlen Bolstad, the SCC’s deputy general counsel, wrote that the legislation “significantly reduces the commission’s authority to ensure that these projects — potentially involving billions of dollars in costs — are actually needed to meet utilities’ public service obligations and that their costs are reasonable and prudent.”
On the House floor, Del. Sam Rasoul, D-Roanoke, withdrew a substitute bill that he said included all the renewable energy, energy storage, and energy efficiency bells and whistles supporters touted but with the restoration of more of the State Corporation Commission’s authority. He withdrew the bill at the request of “the majority of my caucus,” he said in an interview.
“There was not a consensus reason. We took a vote. And then I subsequently withdrew it,” Rasoul said. “I think the bill as introduced was so bad that even the consensus bill is not an improvement for Virginians moving forward.”
Tom Cormons, Appalachian Voices’ executive director, said he was “frustrated” Rasoul’s bill didn’t get a hearing.
“We will not have democracy when it comes to energy issues until we get past the idea that you can’t accomplish anything without Dominion’s blessing,” Cormons said. “It’s a new era now, and those who are still carrying Dominion’s water like it’s 2015 are going to miss the boat.”