At Westwood Fountain - in Westwood Pharmacy - Gov. Glenn Youngkin responds to a questions about balancing tax cuts with education spending needs.
A reduction in Dominion Energy bills is on the way after a compromise on a new approach to regulate the company made it through the General Assembly on the last day of the session. But compromise eluded the legislature on the state budget and Gov. Glenn Youngkin’s bid for $1 billion in tax cuts.
The compromise on electric bills — in legislation that passed nearly unanimously — would bring an immediate $6 to $7 cut in a benchmark 1,000 kilowatt-hour monthly bill, which now stands at $137.
But instead of Youngkin’s proposal for a cut in individual income and corporate tax rates, the House of Delegates and state Senate could only agree on a stopgap “skinny budget” to buy time for the chambers to bridge their wide differences over Youngkin’s tax cuts.
The House and Senate adjourned shortly after 5 p.m. Saturday, closing out a 46-day session. Next year’s General Assembly likely will look markedly different, as new legislative boundaries are producing a wave of retirements and a few contests pitting incumbents against each other.
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Weeks of intensive negotiation over the wide gaps between House and Senate approaches to regulating Dominion yielded compromise.
Youngkin said in a statement: “I applaud the legislators who took the lead on writing and negotiating this landmark bill, which will save customers money on their monthly bills, restore the independent oversight of the State Corporation Commission, and support the long-term stability of Virginia’s largest electric utility. Today, the General Assembly came together and put Virginians first.”
But when House and Senate budget negotiators regrouped on Saturday after a blowup the previous day over how many tax cuts the Senate would accept, all they could agree on was a stopgap for urgent necessary updates to the budget.
“Of course I’m disappointed, because I don’t think it is that hard,” Youngkin told reporters after lawmakers adjourned. “We have plenty of money in the system, we can invest in really important things and cut taxes.”
The stopgap budget will include money to compensate school divisions for a $201 million mistake in the amount of money the Department of Education estimated the divisions would get from the budget adopted in June. “No school division will receive less than the amount communicated last summer,” state Sen. Janet Howell, D-Fairfax, told the Senate.
The agreement allowed the assembly to adjourn on schedule. The nine senators and six delegates on the budget conference committee will try to resolve their differences on the $177 billion, two-year spending plan so that the governor can call legislators back if the negotiators are able to reach a deal.
“We’re pretty far apart now,” House Appropriations Committee chair Barry Knight, R-Virginia Beach, said in an interview on Saturday.
The House, with a Republican majority, had approved all of Youngkin’s proposed tax cuts. The Senate, led by Democrats, refused them and wanted to steer the $1 billion at issue to increased funding for K-12 schools, behavioral health and other public services.
The immediate savings from the utility regulation compromise would come from eliminating some of the two dozen surcharges Dominion charges to recover the cost of recent investments in plant and equipment.
The compromise also sets up a way to spread out the cost of the fuel Dominion burns to generate electricity, which, with recent spikes in natural gas prices, was on track to boost that 1,000 kilowatt-hour bill by $17 this summer.
Instead, using the same financial technique that a Richmond bank pioneered three decades ago, the bill gives the company the option of getting back some $1.6 billion of fuel that it has paid for but has not recovered with smaller surcharges over the next decade.
The electric company says there would be a nominal increase this summer and a $2.50 a month surcharge beginning next summer for the rest of the decade.
The State Corporation Commission would need to approve the spreading-out plan.
An expanded commission role is at the heart of the compromise.
The SCC would now be able to look at the utility’s base rates, which account for about half of customers’ monthly bills.
These have been essentially unchanged since a 2007 bill ended Virginia’s experiment with deregulation, which operated under the theory that competition among suppliers of electricity would save consumers money. Base rates are meant to repay Dominion for its investment in plant and equipment as of that time.
But although most businesses’ assets decline in value over time, base rates have not been adjusted downward. The SCC’s authority to review base rates should lead to lower bills.
The original bill included a directive to the SCC to adopt a new approach to setting the profit rate Dominion is allowed to earn, which would have increased this from the current 9.35% to 10.07%.
The compromise sets a 9.7% profit rate, but for only two years, after which it is up to the SCC to determine the proper rate.
Dominion has said it needs to be able to earn more profits if it is to attract investors, especially as it tries to finance the $9 billion cost of its massive offshore wind farm.
How much the two-year increase for the profit rate would offset the impact of the higher profit rate for those two years depends on what SCC accountants and economists determine is the proper base rates level.
After two years, the SCC would have full discretion to say what Dominion’s profit rate, and therefore the rates it can charge, should be.
“What we have is a bill that is good for consumers and good for Dominion, which we rely on for electricity,” said House Majority Leader Terry Kilgore, R-Scott, who sponsored the House version.
Del. Lee Ware, R-Powhatan, who has pushed for several years for that power for the SCC, originally opposed Kilgore’s bill, but backed the compromise, saying it would protect ratepayers.
“Our duty is to the consumers who pay that bill every month,” he said.
Dominion’s bills are typically the second highest that most Virginians pay, after their mortgage or rent, and the compromise includes protections for which legislators on both sides of the aisle had previously argued unsuccessfully, said Del. Sally Hudson, D-Charlottesville, who backed the deal.
The House and Senate also agreed to prohibit the use of solitary confinement in state prisons, with exceptions for inmates who ask for it or to protect inmates in the event of an imminent threat of physical harm.
Another agreement came on bills that would allow early release from a temporary detention order, which allows people in a mental health crisis to be held for evaluation and treatment for 72 hours. The bills provide for early release if the crisis in question is resolved.
“It will help ease the tremendous pressure on TDO beds,” said Del. Rob Bell, R-Albemarle, who sponsored the House bill. State Sen. Creigh Deeds, D-Charlottesville, sponsored the Senate bill.
The two bodies agreed to let the governor issue grants from the Transportation Partnership Opportunity Fund to pay for improvements for economic development projects.
The compromise says the governor would need advance approval from a legislative commission for grants of $35 million or more. The governor also would have to report to the assembly money committees any grants more than $5 million.
But some legislators still opposed the compromise.
“I don’t want our branch of government giving any power to the executive branch,” Sickles said, before the House voted 57-38 to approve the compromise.
The House and Senate also compromised on a measure to prevent the use of nondisclosure or non-disparagement agreements to retaliate against employees who complain about sexual harassment.
Bell, a delegate for 22 years and a longtime head of the House Courts of Justice Committee, became the latest lawmaker to announce he will not seek re-election.
