As session nears end, negotiations on Dominion rate review bill continue
Differences remain on profit margin, plant retirement language
A sign outside of a Dominion Energy office building in downtown Richmond. (Ned Oliver/ Virginia Mercury)
With only three days left in the General Assembly session, negotiations continue on two bills that would change how much Virginia’s two largest electric utilities are allowed to profit.
A version from Senate Majority Leader Dick Saslaw, D-Fairfax, passed the House of Delegates Tuesday on a near-party-line vote, with most Republicans voting in favor of the measure and most Democrats opposing it. A similar but different version from House Majority Leader Terry Kilgore, R-Scott, passed the Senate Wednesday with a more mixed vote.
Minority Leader Tommy Norment, R-Williamsburg, said stakeholders are trying to come up with something “everybody can agree with.”
The passage of two different versions of the bill means the legislation is now poised to be sent to a conference committee, a small group of lawmakers from both parties and chambers who will try to hammer out a compromise, largely in private, before the legislature adjourns.
Several key differences remain between Saslaw’s and Kilgore’s proposals.
Saslaw’s includes a provision that would change how the State Corporation Commission, which oversees utilities in Virginia, calculates the profit margins for Dominion Energy. The SCC has said the change would increase Dominion’s rate of return from its current level of 9.35% to 10.07%.
Saslaw’s bill also has provisions that would roll $350 million of Dominion’s rate adjustment clauses — charges tacked on to customers’ bills for particular projects — into base rates, the typical charge customers pay based on usage. The SCC has said those changes would result in about a $6 to $7 monthly bill reduction for the average residential customer starting this summer.
Finally, it includes a “fuel securitization” provision that would let Dominion issue about $1.6 billion in bonds to pay for high fuel costs.
Kilgore’s bill includes none of those provisions but does contain language that would change the schedule for retiring carbon-emitting plants outlined in the Virginia Clean Economy Act.
Both bills would move Dominion from triennial to biennial rate reviews.
Groups involved in the negotiations have voiced a range of positions on what provisions should remain in the legislation.
Dominion has said the change to how the profit margin is calculated would allow the company to raise more capital for investments it is mandated to make, while the retirement language is in response to regulators’ concerns about lacking “proactive authority” to make closure decisions.
Republicans, including Gov. Glenn Youngkin, have also lambasted the VCEA’s plant retirement requirements as endangering grid reliability. The Youngkin administration voiced support for Kilgore’s bill earlier in the session and included in its energy plan the desire to “restore discretion to the SCC concerning power plant retirement timelines.”
But environmental advocates say changing the retirement schedule is unnecessary, because the VCEA contains clear language giving the SCC authority to ensure grid reliability.
Conflicts also continue over the changes to the profit margin calculation, which environmental and ratepayer groups say will increase bills over time, especially when coupled with the fuel securitization provision.
Parties involved in the negotiations said the Youngkin administration is participating in discussions and also has concerns with the provision altering the profit margin calculations. Youngkin press secretary Macaulay Porter declined to comment on the governor’s involvement, as did Dominion spokesperson Aaron Ruby.
Albert Pollard, a former delegate now lobbying on behalf of the Virginia Poverty Law Center, said the passage of another piece of utility regulation on Tuesday that gives the SCC more authority to reduce utility rates could put pressure on Dominion to seek a favorable deal in negotiations on Saslaw’s and Kilgore’s bills.
The current state of play for the bills is in flux, Pollard said. But, he added, while other bills have died left and right this session, the possibility of something not getting done is a “low probability.”
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