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Dominion Energy’s bid to boost the profit rate it is allowed to earn ran into trouble Thursday when a House of Delegates committee stripped it out of its version of a bill the electric monopoly has been pushing hard.
The move on House Bill 1770, which legislators say came in response to pressure from Gov. Glenn Youngkin, sets up a confrontation over how much the electric monopoly’s Virginia customers should pay, since a Senate bill is moving that directs the State Corporation Commission to increase Dominion’s authorized profit rate.
Adding to the pressure on Dominion and its legislative supporters, the House Commerce and Energy Committee also approved House Bill 1604, sponsored by Del. Lee Ware, R-Powhatan, and Del. Rip Sullivan, D-Fairfax, that would empower the SCC to review the utility’s base rate, essentially unchanged since 2007.
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“This is the first time in my 12 years here that I’ve seen a utility bill get significantly smaller,” said Del. Chris Head, R-Botetourt, of the vote on the Dominion bill, sponsored by House Majority Leader Terry Kilgore, R-Scott.
But, he added: “This is a work in progress.”
“This bill is better than when it was first introduced ... better than it was yesterday,” Sullivan said of Kilgore’s bill. “I wouldn’t be surprised if this bill looks a little bit different by the end of the session.”
Because the base rate locks in the value of Dominion’s assets as of 2007 and does not account for the usual decline of plant and equipment values over time, a review should tend to bring rates down, Dominion officials have said. About half of Dominion’s monthly bills reflect its base rate.
But since rates reflect both the value of those assets and the authorized profit, the combined effect would add 90 cents to what’s now a $137 monthly bill for 1,000 kilowatt-hours of electricity, SCC director of utility accounting and finance Kimberly Pate told Ware and Sullivan.
And since the higher authorized profit rate would apply to the surcharges, called riders or rate adjustment clauses, that make up about a quarter of current bills, the effect of that would add another 85 cents to that bill, for a total of $1.75, Pate told the two delegates.
But days after she wrote those estimates, she told Kilgore, the House sponsor of Dominion’s bill, that another part of the monopoly’s proposal – rolling some of its riders into base rates – would knock $7 to $8 off a monthly bill.
That means the Dominion package would bring the 1,000 kilowatt-hour bill down by somewhere between $6.17 and $7.17, Pate told Kilgore.
The stripping of Dominion’s bill in the House removes the rider roll-in as well as the profit rate increase. It also strips out a new way of accounting for the utility’s capitalization that would tend to push rates higher.
In addition to Ware and Sullivan’s bill and the stripped-down Dominion bill, the House committee approved House Bill 2267 by Del. Tony Wilt, R-Rockingham, to give the SCC the power to decide whether a utility’s costs for any particular facility or program should be recovered by riders or be rolled into base rates.
Wilt’s bill says the SCC should consider which approach would be fairer to customers.
Dominion’s charges for a 1,000 kilowatt-hour monthly bill climbed to $137 from $90.59 in 2007, when the General Assembly approved Dominion’s plan for ending a failed experiment with deregulation that the monopoly convinced the legislature to enact.
Most of that gain, except for an about $15 jump last summer to cover soaring fuel prices, was due to the introduction of roughly two dozen riders.
For the governor and General Assembly critics like Ware, Sullivan and state Sen. Jennifer McClellan, D-Richmond, who introduced a bill like theirs, criticism of the Dominion bill as it was introduced and then modified by the Senate committee focuses on a portion of the utility’s proposal that directs the SCC to authorize a higher profit rate by using a calculation that would boost that rate from 9.35% to 10.07%.
While the House and Senate must still resolve their differences over the Dominion bill, Ware said he’s hoping his and Sullivan’s bill, the result of years of campaigning, makes it all the way and intact to the governor’s desk.
Ware and Sullivan’s bill, as well as Wilt’s, passed the committee unanimously.
Democrats on the committee voted against the measure. They cited environmentalists’ concerns that Kilgore’s Dominion bill said the SCC should review and approve permanent power plant shutdowns, fearing it would undercut the Virginia Clean Economy Act. The bill passed on a 12-9 vote.
