Dominion bill increases state oversight. Why do I still have heartburn?
Dominion Energy offices in Richmond, Va. (Parker Michels-Boyce/ For The Virginia Mercury)
State lawmakers and consumer activists say the new legislation overseeing Dominion Energy, which places strong regulatory control back with the State Corporation Commission and adjusts the utility’s profit margin, is a huge win for customers across the commonwealth. Gov. Glenn Youngkin, who played a key role in the negotiations, will almost certainly sign it.
“Dominion has been nickel-and-diming Virginians, and the General Assembly has been letting them,” Del. Sally Hudson, D-Charlottesville, told me. This year’s legislation has “been a long time coming.”
“This is definitely a dramatic improvement in the regulatory structure for Virginians,” said Will Cleveland, senior attorney with the Southern Environmental Law Center, an advocacy group. Since 2007, he said, the state had reduced regulatory authority over the electric monopoly.
“This time, the needle moved in the other direction,” Cleveland added.
So why do I feel so much queasiness expecting that Dominion will roll over its 5 million-plus customers in Virginia once again, no matter the assurances to the contrary? Dominion provides service to roughly two-thirds of the state’s residential customers.
Executives at the Richmond-based utility have long dictated the terms of state oversight and legislation, then laughed all the way to the bank. They’ve essentially written previous bills in the Assembly, as news articles have noted.
In one period in the early 2000s, Dominion had so-called “excess earnings” of $860 million. In 2018, it earned almost $278 million more than it was allowed. Plus, a sweeping grid transformation act deferred calculating refunds to customers.
Since 1997, Dominion has donated more to state politicians than any other corporation, according to the Virginia Public Access Project. That status has been eclipsed in more recent years by Michael Bills, a hedge fund billionaire who’s fought Dominion’s influence over legislators with his own donations and through his Clean Virginia political action committee.
Then there’s this bit of unseemly chumminess my former Virginian-Pilot colleague Margaret Edds revealed: In 2006, as she was trying to track down Sen. Tommy Norment, R-Williamsburg, she learned he was on an annual hunting trip in Georgia with Tom Farrell, Dominion’s then-head honcho.
Appearances matter, regardless of the rationale. The junkets raised questions of ethics and impartiality. (Farrell died in 2021, right after he retired from the utility. Norment, the current minority leader, just announced his retirement from the Senate.)
As the Virginia Mercury’s Charlie Paullin wrote, the new legislation sets Dominion’s profit margin at 9.7% for two years. After that, the SCC will be able to set the profit margin based on its discretion.
The current profit margin – the amount Dominion is allowed to earn in addition to the costs of providing service to Virginia customers – is 9.35%, so that’s a win for the energy provider. This also strengthens Dominion when it goes to the bond market to seek capital to build new projects.
Other provisions include, to put it simply, a switch that will lower average residential bills by $6 to $7 a month. That’s not a ton of money for individual families, but no one will give the money back. I know I won’t.
“This legislation is a win for consumers and regulatory oversight,” Aaron Ruby, Dominion spokesman, said by email of the deal. “It will lower electricity bills for our customers, reduce the impact of rising fuel costs and strengthen SCC oversight.”
That’s true. Yet Dominion isn’t giving everything away, either. It certainly didn’t in the past.
Albert Pollard Jr., a lobbyist for the Virginia Poverty Law Center and former state legislator, discussed Dominion’s repeated victories at the state level in a recent op-ed in the Richmond Times-Dispatch. He disparaged Dominion’s ability to use “its powerful legislative allies and legislative trickery to boost profits.”
Pollard listed several key points since 2007 in which he said Dominion resisted true regulation and gained benefits. They included: a 2009 rate settlement case that allowed the utility to avoid over earnings; the 2013 storm write-down legislation; and legislation in 2020 that allowed the utility to avoid competition for offshore wind.
“The SCC starting in 2025 will have full regulatory control,” Pollard told me in an interview, adding the commission hasn’t had that in more than a dozen years. That’s consequential.
So, what’s changed since the mid-2000s?
A new crop of legislators ascended to power, joining existing ones who were already critical of the utility.
They were skeptical of Dominion’s repeated jeremiads that it required relief and a hands-off approach.They include Del. Lee Ware, R-Powhatan, Sen. Jennifer McClellan, D-Richmond, who just won election to the U.S. House of Representatives, Sen. Chap Petersen, D-Fairfax, Hudson and former Del. Jay Jones, D-Norfolk.
Second, lots of lawmakers – mainly Democrats – pledged not to accept Dominion financial contributions over roughly the past half-dozen years. Many got donations from Bills or Clean Virginia. (Some Democrats, though, have been among the utility’s biggest supporters, including Sen. Dick Saslaw of Fairfax, the soon-to-retire majority leader.)
Large corporations also sought tighter controls on Dominion rates, including Wegmans and AWS, the web services arm of Amazon.
Lastly, Youngkin made a huge push to clamp down on Dominion. That might have convinced some Republicans to jump on board. The governor previously criticized high energy costs.
“You can see all of our ideas back in our all-American, all-of-the-above energy plan,” Youngkin said as the Dominion deal was announced. “… We felt, along with a bipartisan group of senators and delegates, that there was a moment to really reset. The first big thing we wanted to do was make sure that we were protecting consumers.”
I can’t see Dominion capitulating. The company remains a behemoth. The year 2025 will provide a good barometer.
I’m hoping for the best. And keeping the Tums handy.
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