Virginia Supreme Court upholds decision blocking Walmart from electricity choice

By: - July 10, 2020 12:14 am

Transmission lines in Louisa County. (Ned Oliver/ Virginia Mercury)

The Supreme Court of Virginia quashed Walmart’s effort to buy energy from companies other than state utilities Dominion and Appalachian Power Company Thursday when it upheld an earlier decision by the State Corporation Commission blocking such an attempt.

“Despite its ostensible complexity, this case boils down to a simple conclusion: The commission believed that now is not a good time to grant these petitions,” the court concluded in an opinion penned by Justice Arthur Kelsey.

The ruling brings to an end yet another chapter in the long-running saga of companies seeking to buy their electricity in Virginia from non-utility providers by taking advantage of three loopholes in state code allowing retail choice.

Two of these loopholes are straightforward. One allows any customer that uses more than five megawatts of power to exit the utility’s customer pool. Another allows customers to buy “100 percent renewable energy” from third-party providers as long as the utility doesn’t offer the same thing. The latter loophole is rapidly closing: Appalachian Power has had a fully renewable option on its books since 2019, and regulators earlier this month approved a similar offering from Dominion.

The third loophole, which was under examination in the Walmart case, allows a customer with multiple sites in Virginia that collectively use more than five megawatts of electricity to combine those loads and buy energy from a non-utility if doing so doesn’t harm remaining customers or go against the public interest.

Beginning in December 2017, Walmart sought to do just that at more than 160 stores using about 91 megawatts of electricity across both Dominion and Appalachian Power territory. 

State regulators, however, denied their request. Letting Walmart leave the utilities’ customer pools, they found, would on average increase monthly bills by 13 cents for remaining Dominion ratepayers and 5 cents for Appalachian Power ratepayers, while shifting $65 million in costs to Dominion customers and $4 million to Appalachian Power customers over the next decade and potentially affecting possible customer refunds. 

“Given the context of a decade of rising rates and the likelihood of even higher rates in the future, we do not find it consistent with the public interest for captive customers who do not have the legal ability to obtain lower rates — predominantly residential and small business — to suffer from the cost-shifting identified herein by enabling a large-demand customer to seek its power supply elsewhere through aggregation,” the State Corporation Commission ruled. 

After its defeat, Walmart asked regulators to reconsider a scaled-down version of its original request, but the commission rejected their request. Walmart subsequently appealed to the Supreme Court of Virginia.

Walmart contended that the SCC’s understanding of the “public interest” wasn’t aligned with the General Assembly’s intent in crafting the code’s loopholes to let large retail customers get their electricity from third-party providers. 

The effects to other customers of letting Walmart exit the pool were minimal, the company said: only 5 to 13 cents on the average monthly bill. By construing any negative effect on bills as being against the public interest, Walmart maintained, the State Corporation Commission was effectively barring any customer from taking advantage of the third loophole.

But the Supreme Court rejected that argument, calling it “a tightly constructed syllogism” that “might be persuasive if (the code subsection) were the only relevant statutory language informing us of the General Assembly’s intent. But it is not.” 

Instead, state code makes it clear that in the case of the third loophole, the commission has the discretion to do as it sees best in individual circumstances, Justice Kelsey found. And in the Walmart case, “the commission examined the benefit-burden equation in the larger context in which it plays itself out,” determining that within the broader context of a decade of rising rates and expected additional increases, it would not be in the public interest to grant this petition.”

The court also ruled that recent legislation establishing a retail choice pilot program in Dominion territory that went into effect July 1  had no bearing on the case.

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Sarah Vogelsong
Sarah Vogelsong

Sarah is Editor-in-Chief of the Mercury and previously its environment and energy reporter. She has worked for multiple Virginia and regional publications, including Chesapeake Bay Journal, The Progress-Index and The Caroline Progress. Her reporting has won awards from groups such as the Society of Environmental Journalists and Virginia Press Association, and she is an alumna of the Columbia Energy Journalism Initiative and Metcalf Institute Science Immersion Workshop for Journalists.