Senate bucks the wishes of Dominion, Saslaw, Norment in surprise power plant retirement vote

A bill from a freshman Democrat that could cut into Dominion Energy’s profits caused a stir at the Capitol Wednesday when it passed over the objections of two of the most powerful members of the Senate, Majority Leader Dick Saslaw of Fairfax and Minority Leader Tommy Norment of James City.

But while legislators swiftly backpedaled, supporting a motion by Democratic Sen. Louise Lucas of Portsmouth to reconsider the vote and then put it off until Thursday, the bipartisan 27-13 count sent shock waves through the halls of the legislature, where it represented open defiance of not only Saslaw and Norment, but also Dominion, long an influential force in Virginia politics.

“The Virginia General Assembly has changed,” said Del. Suhas Subramanyam, D-Loudoun, the lawmaker behind the bill at the center of the flurry.  “One entity doesn’t determine our policy on issues. Legislators can think for themselves and take the merits of a bill on its face rather than needing to consult an entity.”

Del. Jay Jones, a Democrat from Norfolk serving his second term, took a more cautious view. Jones, along with Del. Lee Ware, R-Powhatan, also put forward a bill this session known as the Fair Energy Bills Act that could have chipped away at Dominion’s profits. Despite clearing the House, however, that legislation foundered in the Senate Commerce and Labor Committee, which Saslaw chairs and on which Norment sits. 

“Certainly in the House I think [Dominion’s] influence has waned,” said Jones. “I think in the Senate they are probably not there yet, but I think there is some serious consideration of their practices.”

“It’s a different body and it’s got different folks, and their relationships are a lot longer in duration with Dominion,” he added. “You can’t discount that.”

Six words, big money

Subramanyam’s bill would give the State Corporation Commission the power to determine the period of time over which Dominion and Appalachian Power Company, Virginia’s two largest electric monopolies, can recover the costs of power generation plants that are retired early. 

Dominion in particular has strongly opposed the legislation, which would undercut a key victory won by the utilities with the passage of the 2018 Grid Transformation and Security Act: the right to recover certain costs, including plant retirement costs, all at once rather than spreading them out over a number of years. That ability allows the utilities to effectively subtract those costs from the pool of overearnings they might otherwise have to refund to customers.

The issue isn’t hypothetical, particularly when it comes to Dominion. Although the company disputes the numbers, the SCC has calculated that since 1994, the utility has overearned $3.4 billion, of which it has returned only $1.3 billion to customers in the form of refunds or credits. Most recently, in 2018, regulators calculated that overearnings amounted to $278 million.

“Basically what they’re doing is nullifying the requirement to give refunds to their customers that will have been overcharged,” said Sen. Chap Petersen, D-Fairfax City, in a floor speech Wednesday.

Dominion, however, has contended that the legislation would not only override part of the Grid Transformation and Security Act but could, in the words of Dominion Director of Corporate Affairs and Communications Bill Murray, “complicate retirement of fossil fuel generation stations” at a time when the state is trying to move toward a zero-carbon electric grid by midcentury. (Dominion has said it has a policy of not speaking to the Virginia Mercury.)

Much of the fight in committee and on the Senate floor ultimately came down to a six-word clause: “Notwithstanding any other provision of law,” a phrase Norment has expressed special aversion to and which he and Saslaw sought to strip from the bill through an amendment.

That change “narrows the scope of the bill considerably, and it should,” Saslaw told the Senate Wednesday. “I didn’t like the bill to begin with, and I voted against it, but we just thought this was kind of broad.”

Norment said that there was nothing “insidious” about the amendment.

“All we’re saying is that the law is existing as it currently does,” he said. “[The amendment is] not going to turn the current posture of electric generation on its head.”

But that, Sen. Richard Stuart, R-Stafford, complained, was precisely the problem.

“The whole point of the bill that they’re attempting to amend is to give fairness back to the ratepayers. … If you adopt the amendment, then it is to no avail,” he said.

In response to a question from Sen. Joe Morrissey, D-Richmond, about whether the “real rub” of the situation was that under current law, a utility can avoid repaying customers for overearnings by recovering its plant retirement costs in a single year, Norment conceded that “in a vacuum” that account “is reasonably accurate.”

But, he argued, with the sweeping changes to energy policy the General Assembly is ushering in this session, the actual impacts of changing the current system are unclear.

Saslaw also urged caution: “The utilities are doing exactly what we told them to do two years ago,” he said. “We can’t keep coming in here every other year changing the ground rules because somebody has a bone to pick with them or thinks, well, we made a mistake”

Other lawmakers, however, including Stuart, Petersen and Sen. David Suetterlein, R-Salem, argued that changing the rules was well within the purview of the General Assembly.

“It boils down to this. The utility has an obligation to the shareholders. We have an obligation to the ratepayers. They are the folks who elect us,” said Stuart. “Regardless of whether anybody made a mistake or thinks they made a mistake in that grid transformation bill, our obligation and responsibility remains to the ratepayer.”

‘Regardless of the traditions’

Subramanyam said he had not been surprised by the Senate pushing pause on his bill after its unexpected victory.

“The utility companies are going to continue to want to fight it,” he said. Still, he expressed confidence that any further amendments to the measure would be minor and said he would oppose any new language that undermined its intent.

Down the hall, Jones was also chipping away at another provision of the 2018 Grid Transformation and Security Act in the chamber on the other side of the Capitol. Early in Wednesday’s session, he successfully introduced amendments to a bill sponsored by Sen. Jennifer McClellan, D-Richmond, that will remove a $50 million cap that the GTSA had placed on reductions to utility rates during their next review, scheduled for 2021.

The failure of Jones and Ware’s Fair Energy Bills Act this year was, Subramanyam said, a “missed opportunity,” but one that was part of a longer-term battle that would continue into future sessions.

“We’ll keep fighting it,” he said, “regardless of the pressure and regardless of the traditions here.”