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Virginia Senate panel spikes bill that would restore utility rate reviews

Virginia Senate panel spikes bill that would restore utility rate reviews

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Sen. J. Chapman Petersen, D-Fairfax City, prepared to present a bill Monday during a meeting of the Senate Commerce and Labor Committee.

A bill that would have reinstated utility rate reviews and customer refunds — if and when the federal Clean Power Plan gets torpedoed by the new presidential administration or a Supreme Court review — was shot down Monday in the Senate’s Commerce and Labor Committee.

Still, its patron, Sen. J. Chapman Petersen, D-Fairfax City, vowed to find a way to get it to a floor vote.

“Don’t confuse this committee with prevailing public opinion or prevailing opinion within the General Assembly,” Petersen said. “I’ve got my ways. We’re just getting started.”

Petersen’s bill would allow the State Corporation Commission to resume reviews of utility rates as soon as the Clean Power Plan provisions “are withdrawn, repealed, found by a nonappealable court decision to be invalid or unenforceable, or otherwise are legally barred from being implemented.”

It was “passed by indefinitely” on an 11-2 vote by members of the Senate Labor and Commerce Committee.

Sens. Richard H. Black, R-Loudoun, and Stephen D. Newman, R-Lynchburg, voted against the motion to shelve the bill.

Two years ago, the General Assembly and Gov. Terry McAuliffe halted biennial reviews of base rates for Dominion Virginia Power and Appalachian Power, along with refunds for customers if the utilities overcharged, ostensibly to help them weather the financial challenge posed by looming implementation of the Clean Power Plan.

Yet the State Corporation Commission, in a report to the General Assembly in September, said any costs posed by new environmental restrictions would be recovered via riders, not base rates.

And the report also found that though Dominion Virginia Power and Appalachian Power’s rates were competitive with peer utilities, it cautioned that “pending rate requests could lessen the competitiveness of electricity rates in the future.”

In another blow to the bill’s raison d’etre, compliance with the Clean Power Plan was not to begin until 2022, the same year Dominion’s biennial reviews are scheduled to resume. The commission found “that the currently effective base-rate freeze is highly unlikely to protect Virginia ratepayers from the bulk of CPP compliance costs.”

The State Corporation Commission found that Dominion earned a combined return on equity, or profit margin, of 11 percent during the 2015 calendar year, exceeding the return most recently approved by the commission by about 1.4 percentage points, “or approximately $106.7 million in revenues.”

Including $172 million in costs Dominion expensed for coal ash cleanup in 2015, instead of spreading them out over several years as the SCC might have required in a rate case, means Dominion’s return on equity actually might have exceeded its authorized rate by 3.7 percentage points, or nearly $279 million for that year alone. Appalachian Power “overearned” by nearly $36 million in 2015.

Opponents of the rate freeze — including Ken Cuccinelli, the former Virginia attorney general and 2013 GOP nominee for governor, who is filing a brief in support of a case seeking to overturn the 2015 law that allowed it — say the legislation actually locked in rates that were already too high.

“I would prefer to see the captive rate-paying citizens of Virginia made 100 percent whole for the money taken from them by the passage of SB 1349 in 2015, but SB 1095 before you at least will ‘stop the bleeding’ at some point in the not-too-distant future,” Cuccinelli wrote in a letter that was given to the senators Monday.

“While SB 1095 in the form originally drafted will not make Virginians 100 percent whole, it will reduce the amount of money taken from them and given to Virginia’s two largest utilities from billions of dollars between now and 2022 down to ‘merely’ hundreds of millions of dollars.”

Cuccinelli’s successor as attorney general, Democrat Mark R. Herring, also opposed the rate freeze.

“We felt it was improper to prevent the SCC from monitoring earning. ... The EPA’s Clean Power Plan was the stated reason for this legislation in 2015,” Assistant Attorney General C. Meade Browder Jr. told the committee, adding that it was “only logical” that the rate freeze would also go away.

The U.S. Supreme Court stayed the Clean Power Plan in February 2016 while courts reviewed it. In September, arguments were heard before the U.S. Court of Appeals for the District of Columbia Circuit.

Dominion has pointed to other provisions of the bill, including compromises that added an infusion of dollars into a weatherization program for the elderly, low-income people and veterans, and a Dominion commitment to more solar energy development. The utility has 391 megawatts of solar power in operation or under development in 12 localities.

“Consumers are the winners here today, as they have been under SB 1349,” David Botkins, spokesman for Dominion Virginia Power, said in a statement. “Customers’ rates are lower today than when the original bill was passed. The company has absorbed millions of dollars of costs that have been incurred from storms like Hurricane Matthew. Combined with the regulatory uncertainty still in Washington, today’s committee vote was very important.”

William G. Thomas, a senior partner at Reed Smith and a Dominion lobbyist, told the committee that uncertainty over the Clean Power Plan lingers, as well as over what incoming President Donald Trump’s administration might do.

Trump’s chosen pick to head the Environmental Protection Agency is Scott Pruitt, the Oklahoma attorney general who is suing the federal government over the plan.

“Senator Petersen has said they will certainly happen. Maybe they will, maybe they won’t,” Thomas said of the provisions in Petersen’s bill. “On Jan. 20 the new president could send out a tweet saying this is no longer enforceable. My question is: Does that meet the standard of this bill?”

The Virginia Chamber of Commerce and representatives from the solar industry, which saw growth as a result of Dominion’s commitment to build more solar generation, as well as the coal industry argued against the bill as well.

In an interview before the vote, Petersen said the Trump administration will “dismantle” the Clean Power Plan.

“The bottom line is the current law is unacceptable,” he said. “You’re going to have the utilities potentially making obscene profits in the next few years.”

The senators also got a letter from Consumers Union, the advocacy division of Consumer Reports, urging them to support Petersen’s bill.

“It is shameful to allow utilities to withhold consumer rebates to which consumers are rightly entitled and need for other household expenses,” the letter said.

The Virginia Chapter of the Sierra Club blasted the vote by the Senate committee as a decision to “continue Dominion Virginia Power’s billion-dollar boondoggle, allowing the company to overcharge its customers.”

The Clean Power Plan, the statement noted, did not require the closure of a single coal plant in Virginia.

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