General Assembly far apart on utility regulation
House and Senate proposals cover different areas. Both would increase the frequency of electricity rate reviews.
The Virginia Senate and House of Delegates both approved much-changed versions of a Dominion Energy–backed electric utility regulation bill on Tuesday, although the measures have little in common at this point.
Senate Minority Leader Tommy Norment (R–James City) summed it up from the Senate floor on Tuesday: “As a poet once said, there are miles to travel before we sleep on this bill.”
Dominion representatives have said the Senate version, sponsored by Senate Majority Leader Richard Saslaw (D–Fairfax), would go far to reduce monthly bills for ratepayers.
It would roll $350 million in rate adjustment clauses, or riders, into base rates — an effort to lower electric rates as they rise nationwide. The measure would also spread a fuel cost spike brought on by the war in Ukraine and inflation over 10 years, reducing the monthly electric rate increase from $17 a month to $2.50, according to the company. Dominion would cover costs in the short term by issuing about $1.5 billion in bonds.
“Without this bill, rates would go up $17 a month on the average bill,” Saslaw said on the Senate floor.
Some legislators expressed concerns with changes to how state regulators determine Dominion Energy’s approved profit level, saying they would almost certainly increase the company’s return on equity – which would be covered by ratepayers. Sen. Chap Petersen (D–Fairfax) said he thought it was the wrong way to go, arguing the commission should not be required to set Dominion’s ROE based on a peer group.
“It locks us into basically what is a group of sister utilities. It takes away the SCC’s discretion,” Petersen said.
In a letter to lawmakers this month, state regulators estimated cutting back on riders and increasing the ROE would result in net savings between $6.17 and $7.17 on a ratepayer’s monthly bill when Dominion’s next rate review comes around in 2024.
Speaking of the next review, both the Senate and House versions of the bill would push it forward a year to summer 2023. Dominion representatives told lawmakers that would mean ratepayers see savings sooner. Reviews would also happen more frequently — every two years instead of every three. That’s about all the bills have in common now.
The House’s measure doesn’t change utilities' ROE calculation or tackle riders, but it would require the SCC to study the potential impacts of fossil fuel power plant retirements, which are mandated on a schedule in the Virginia Clean Economy Act. Supporters of slowing the closures have said the extra scrutiny is needed to protect grid reliability, while environmentalists have argued the VCEA already has reliability safeguards.
In short, there’s much left to discuss and reconcile after crossover.
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