By Kennedy Maize
Local Virginia opposition to the $67 billion merger of Richmond-based Dominion Energy and Florida’s NextEra Energy is coalescing as the Virginia State Corporation Commission (SCC), the Old Dominion’s utility regulator, nears a Nov. 5 “public comment session” on the deal. The SCC has scheduled a Nov. 17 “evidentiary hearing.” 
Perhaps most significant, the SCC staff has panned the merger in a 201-page filing on Oct. 19, which includes “sensitive, confidential, and public” elements. The SCC staff “concludes that the Petitioners have not met their burden to prove that ‘adequate service to the public at just and reasonable rates will not be impaired or jeopardized.’”
The staff said the merger, if approved, would harm Dominion’s primary asset, the regulated Virginia Electric Power Company utility, commonly known as VEPCO and “would not be easily undone and would have very long-lasting impacts in Virginia.”
Should the SCC sign off on the deal, the regulatory staff suggests the creation of protections for Virginia customers. These include an “independent board of directors” for VEPCO, a “bankruptcy remote special purpose entity,” and “limitations on dividends to be paid” by VEPCO.
The staff also says that the SCC should require the utility to “maintain employee levels in Virginia at least at their current levels for 10 years,” prohibit “reducing headcount levels, centralizing, or otherwise consolidating operations” at the utility’s generating stations for 10 years, and establish another SCC hearing seven to eight years after the merger to review the utility’s “provision of adequate service at just and reasonable rates…”
At the same day the staff released its merger bombshell, Gov. Abigal Spanberger also outlined her objections to the merger in a news release. She previously said she was “deeply skeptical” of the deal. In her office’s SCC filing, the Spanberger administration called for a six-year freeze on residential electric rates and tripling monthly customer bill credits to $29 as a condition for “any merger.” 
Spanberger said, “As Governor, I will continue to advocate aggressively on behalf of Virginians over the coming months, and I remain deeply skeptical that the proposed $67 billion merger, as currently structured, will adequately protect consumers and deliver meaningful public benefits. Without enforceable commitments that meaningfully prioritize ratepayers, lower energy costs, protect Virginia’s utility workforce, and advance Virginia’s energy goals, the State Corporation Commission should reject this merger.”
In August, her news release recalled, Spanberger “formally filed a Notice of Participation as Respondent, becoming the first Governor of Virginia to intervene at the SCC.” She announced her decision to in a Washington Post op-ed with “three non-negotiable priorities: delivering more affordable energy bills for Virginians, protecting Virginia’s utility workforce, and accelerating Virginia’s progress toward producing affordable, reliable, local, and clean power into the future.”
Public interest group Clean Virginia offered testimony from two experts who are also skeptical of the merger: Veteran D.C. pubic interest energy lawyer Scott Hempling and San Francisco investment analyst Albert Lin.
Clean Virginia, founded in 2018, describes itself as “a nonprofit advocacy organization dedicated to removing corporate money from Virginia politics and reforming utility regulation to put customers first.”
Both Hempling and Lin focused on the impact of the merger of Dominion on its Virginia electric utility, citing a section of Virginia law (Virginia Code § 56-90). It mandates that the merger “will not impair or jeopardize adequate service at just and reasonable rates.”
Hempling, a former administrative law judge at the Federal Energy Regulatory Commission, former head of the National Regulatory Research Institute, and long-time law professor at Georgetown University Law Center, writes that the “will not” language mandates that Dominion and NextEra prove that the merger won’t breach the requirement. Hempling says, “Dominion is selling control of VEPCO’s government-granted franchise to get gain for Dominion’s shareholders. NextEra is buying control of that government-granted privilege to increase earnings for its shareholders.”
Lin is an economic and financial consultant with San Francisco Bay-area OG Finance Lab, with more than 35 years in finance and capital markets. He notes that the deal would combine VEPCO’s regulated business with Next Era’s unregulated merchant developer, NextEra Energy Resources (NEER), which is “exposed to competitive markets and speculative investment risk. That violates the ‘will not’ dictum.
Lin predicted that “ratepayer-supported cash flows would become a smaller part of a larger corporate structure that also finances nonregulated growth. This creates potential pressure on the utility’s credit quality and financing costs. In addition, Virginia’s oversight would be diminished as VEPCO becomes a smaller part of the combined company.”
The Quad Report, covering energy policy and politics