Virginia-based powerhouse Dominion Energy is facing serious a serious challenge from the state legislature and the governor, in complete control of Democrats for the first time in decades. While the Richmond-based, vertical and horizontal multi-state utility has long been the most significant corporate political player in the state, it is now challenged by forces it long viewed as insignificant.
At issue is a 2015 sweetheart deal the company cut with a Republican-dominated state government. Hubristically-named Dominion (still known legally as Virginia Electric & Power Co.) persuaded the state government to freeze base electric rates in the state for seven years, preventing the utility regulator, the State Corporation Commission (SCC), from reviewing the rates. If the costs actually declined, the SCC would be forestalled from ordering rate cuts or refunds to consumers.
The utility company at the time said it was scared that the Obama administrations Clean Power Plan, aimed at reducing coal-fired generation, would increase costs and jeopardize its finances. The company said it would freeze rates in a bargain with the state and the Obama plan would not force it to face rate increase proceeding at the SCC.
But, of course, the Obama climate plan died with the advent of the Trump administration (and there was a good chance federal courts would kill it as executive branch overreaching, since Congress had repeatedly rejected global warming legislation).
The 2019 statewide elections (Virginia holds its elections in years when there are no federal elections, for reasons best described in J. Harvie Wilkinson’s excellent 1968 history, “Harry Byrd and The Changing Face of Virginia Politics, 1945–1966,” Charlottesville: University Press of Virginia) overturned Republican rule in the legislature. The Democratic governor, Ralph Northam, was not particularly sympathetic to Dominion.
Last week, two state members of the General Assembly – Republican Lee Ware and Democrat Jay Jones introduced legislation that would roll back the 2015 rate freeze and tell the SCC to review the utility’s electric rates. A similar bill failed this year in the state Senate after passing in the General Assemply. The Nov. 5 election gave the Democrats control of both houses. As the Washington Post noted, many of the newly empowered Democrats ran against Dominion, which has historically been the largest campaign contributor in the state, bestowing both parties with its largess.
The sponsors pointed out that the SCC has found Dominion overcharged electric customers by some $1.3 billion since the freeze went into effect. Dominion says the rates reflect factors such as weather, and are just and reasonable.
In a related matter, Dominion, at the same time the solons were seeking to overturn the rate freeze, filed a permit with the Virginia Department of Environmental Quality to build a $600 million, four unit, 1 GW gas-fired peaking plant. The company argued that the plant is necessary to backup energy from wind and solar renewables. Dominion has said it will add 3 GW of renewable generation by 2022. The company also argued that battery storage is too expensive and won’t serve the loads required.
S&P Global Finance reported, Dominion is on a building spree despite a declining demand, leading to a major surplus of generating capacity. The trade newsletter said, “The proposals come as electricity demand in Virginia grew less than 1% from the Great Recession of 2007-2008 through 2017, according to the U.S. Energy Information Administration, and is projected to remain essentially flat for at least the next decade. In an era of little to no demand growth, when it is already removing plants from service long before their planned retirement dates, Dominion continues to add thousands of megawatts of new gas-fired capacity. And since it is a regulated monopoly, the company continues to pass the costs of those plants along to its customers.”
Will Cleveland at the Southern Environmental Law Center, representing the group before the SCC, said. “Their forecasts have consistently and inaccurately over-predicted load. And when the commissioners ask ‘What are you doing to fix it?’ the answer is ‘Nothing.’”
— Kennedy Maize