For Dominion Energy’s electric bus bill, the third time was not the charm.
Late Saturday night, the Virginia House of Delegates voted once again to reject a controversial proposal that would have smoothed regulatory approvals for Dominion, the state’s largest electric utility, to get into the electric school bus business.
The vote was the latest defeat of legislation that the House had already rejected twice in various forms, including once before that same evening. Similar versions last year were also struck down by the chamber repeatedly.
“Last year we saw a version of this bill, and we as a body voted no. This year, we saw a version of this bill, and we as a body voted no. We then amended the bill and sent it on to the Senate with a version that would have controlled costs in a very serious way. Those amendments were rejected,” Del. Dan Helmer, D-Fairfax, told delegates before the final vote. “We voted again on this bill and we voted no. … It is time for us to move on.”
A new direction for utility growth
In a session in which Virginia Democrats devoted significant energy to pushing through laws incentivizing electric vehicle use, the electric school bus bill became a flashpoint because of its connection to Dominion.
Long one of the most influential forces in Virginia politics, Dominion remains one of the biggest corporate donors to political campaigns on both sides of the aisle, including Sen. Louise Lucas, D-Portsmouth, who carried electric school bus legislation in both 2020 and 2021 and, according to the Virginia Public Access Project, has accepted $136,500 in donations from the utility since 2017. During legislative sessions, the utility employs a fleet of lobbyists to advocate for its interests; since May, VPAP records show the company has registered 31 lobbyists.
Dominion has also shown an increasing interest in electric school buses. In August 2019, the utility announced a pilot program that would deploy 50 school buses throughout its territory to replace districts’ diesel buses and would use the batteries as storage resources to help stabilize a grid increasingly integrating renewables.
On investor calls, then-CEO, president and chair Tom Farrell touted the program, calling it a “nation-leading initiative.” In February 2020, with Lucas and Del. Kaye Kory, D-Fairfax, carrying electric bus bills in the legislature, he told investors and analysts that if the laws passed, the company would expand the program to 1,500 buses at an estimated cost of $400 million.
“Ultimately, we would replace all 13,000 diesel school buses in our Virginia service territory,” he said.
Since then, Dominion has doubled down on renewables. In a July surprise, the utility announced it had canceled the long-delayed $8 billion Atlantic Coast Pipeline and was selling almost all its gas transmission and storage business to Berkshire Hathaway. Spurred on by the 2020 Virginia Clean Economy Act, Dominion embraced what it called a repositioning to a “pure-play” regulated utility model that would capitalize on the flood of clean energy investments that were already underway. Last month February, Farrell told investors that Dominion had identified “over $70 billion of green investment opportunity between 2020 and 2035,” nearly all of which could potentially be recouped from customers plus profit for investors.
“This is, as far as we can tell, the largest regulated decarbonization investment opportunity in the industry, and the accelerating electrification of the transportation sector promises to drive growing demand for utility-scale zero- and low-carbon generation for many years to come,” he said.
During hearings on Lucas’ electric school bus bill this session, the company emphasized for lawmakers the role the buses could play in meeting the state’s renewables targets.
“As part of the VCEA last year, 2,700 megawatts of energy storage was required to be either installed or procured by Dominion by 2035,” lobbyist Christine Noonan told one committee while justifying the costs of the proposed program, which the utility calculated would cost the average customer about $12 extra per year. “So an increase in cost to that effect in carrying out the requirements of the VCEA was inevitable, and I think this is an excellent step in that direction that not only benefits the ratepayer but also benefits our schoolchildren and our environment.”
‘A lot of money on the line’
Many lawmakers, Democrats and Republicans alike, however, proved skeptical of the idea of utility ratepayers paying for school buses, particularly as the bill continued to resurface after being voted down.
“This one kept coming back because there was a lot of money on the line — and a lot of money on the line for a company with an outsize influence in Virginia,” said Del. Sally Hudson, D-Charlottesville.
On the House floor, Del. Lee Ware, R-Powhatan, who has been one of the longest-running advocates for utility customer protections and rate reform, cautioned lawmakers to think “long and hard” before passing the measure.
“I am aware of at least three different versions of this bill that have appeared this very day, all of them I suspect, a couple of them that I know, have been written by Dominion,” he said. “So they clearly have a great deal of interest in seeing this version put on the record for some reason.”
Dominion did not answer specific questions from the Mercury, including one about whether its officials had drafted versions of the bill.
“We will continue to work to move this innovative program forward for the benefit of the grid, the environment and the health of school children,” said spokesperson Rayhan Daudani in a statement.
Throughout the session, supporters of the bill tried various strategies to get it across the finish line. The size of the program was reduced from 1,250 to 1,000 buses. A provision declaring the bus program “in the public interest” that would have strongly tipped the scales in favor of regulatory approval was removed and replaced with language granting regulators the authority to determine whether proposals were “reasonable and prudent and in the public interest.” Another would have required that 25 percent of all buses deployed go to Title I schools, which are those with high numbers of low-income students. And another, in an amendment added by the House and later stripped out, would have capped costs.
Lucas, in one legislative maneuver intended to keep her proposal afloat, replaced another bill creating an electric vehicle grant fund with her own bill — a move that multiple sources familiar with negotiations said helped it stay alive.
Lucas’ office did not respond to a request for a comment.
In the House, lawmakers remained split. Democratic leadership, including Speaker Eileen Filler-Corn, Majority Leader Charniele Herring and House Democratic Caucus Chair Rip Sullivan all repeatedly voted in favor of the bill. Sullivan presented the final versions of the bill in the House, praising the authority it granted regulators to review whether projects were in the public interest, which he called “a very significant shift.”
Asked why the speaker allowed the bill to be revived numerous times, once in violation of procedural rules, Filler-Corn’s communications director, Kunal Atit, said that “the House on occasion votes on bills multiple times during a session.”
Helmer too noted that the bill is “not the only legislation that’s ever gotten a second chance.” But, he said, “I am frustrated that Dominion’s legislation seems to get chances that other legislation does not.”
Ultimately, the debate would stretch until just before 11 p.m. on Saturday, when the bill became the last one the House would take up in the 2021 session. Sources with knowledge of the deliberations said some House members had been wary of letting the bill die completely while there was still time for the Senate to retaliate by killing House bills that remained alive, but with the Senate’s adjournment just past 10:30, the back-and-forth ended.
In the days after the vote, legislators and lobbyists offered a variety of explanations for the bill’s failure.
Many lawmakers balked at the prospect of allowing Dominion to expand into the transportation sphere, particularly for a program with a large price tag: not including the costs of charging infrastructure, an estimated $345 million, with $108 million of that being profit, according to projections provided by the State Corporation Commission to Hudson in a Feb. 22 letter.
“There is no natural reason for a utility to be engaged in transportation, and there are models that exist as close as Maryland on how you do electric school buses in a cost-effective way,” said Helmer, referring to a recent announcement by Montgomery County, Md. schools to lease 326 electric school buses in a “budget-neutral” deal.
Some Democrats also indicated the failure of a slate of bills that aimed to reform electric utility rate reviews likely played a role in the bus bill’s defeat. Those efforts, which were quashed by the Dominion-friendly Senate Commerce and Labor Committee, reflect an increasing backlash to Dominion that has been underway since 2018 as a new wave of lawmakers more skeptical of corporate interests has been elected and regulators have issued reports that the utility is overcharging customers.
“Dominion has a well-established history of manipulating the General Assembly to secure utility-friendly legislation, but those days are over,” said Brennan Gilmore, executive director of Clean Virginia, a political action committee and advocacy group founded by Charlottesville millionaire Michael Bills in 2018 to counter Dominion’s influence in Richmond. “A new generation of lawmakers have joined veteran consumer protection champions to restore necessary balance to the creation of energy policy in the commonwealth.”
Hudson called the General Assembly’s ultimate rejection of the bus proposal as “an important vote” for legislators grappling with the role utilities should play in policymaking.
“We are in the middle of a massive energy transition, and this vote was largely about defining the boundaries of a utility. … There’s a lot of money to be made in all these new ventures, and it’s easy, I think, for some to lose track of those boundaries,” she said.