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Bipartisan bill in Virginia chips away at excess profits of Dominion, Appalachian

Bipartisan bill in Virginia chips away at excess profits of Dominion, Appalachian

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Dominion Energy building

The Dominion Energy building and the Richmond city skyline as seen from the James River on Jan. 24, 2019.

RICHMOND — Two state lawmakers unveiled a bipartisan effort on Thursday to reclaim the state's authority to set electric rates, a sign that the incoming Democratic-controlled legislature may take on Virginia's biggest utility, Dominion Energy.

Dels. Lee Ware, a Republican from Powhatan and Jerrauld "Jay" Jones, a Democrat from Norfolk, said their proposal is a "common sense" effort to restore protections for consumers.

Called the "Fair Energy Bills Act," the measure would reinstate the authority of the State Corporation Commission to review electricity base rates and set profit levels for Dominion and the state's other major electric utility, Appalachian Power.

Much of that authority was stripped away in 2015 when the General Assembly agreed to freeze base rates and prevent the commission from ordering the utilities to return excess profits to ratepayers.

At the time, Dominion had argued that it needed the freeze because the uncertainty of the Obama administration's Clean Power Plan threatened its financial stability. The Trump administration killed the Clean Power Plan, but the seven-year freeze on base rates remained in place.

Ware and Jones said they want the commission to have full authority to examine base rates and order refunds when it conducts its next four-year review in 2021.

"This bill is aimed at ensuring there will be a clean rate case and no overcharging by public utilities," said Ware, who introduced a similar measure in the 2019 General Assembly session. Despite having bipartisan support, the proposal was quashed by Republican leaders, who controlled both chambers of the legislature.

"I'm not sure there was an appetite for legislation of this nature," Jones said, "but with these historic elections the last couple of cycles, I think we've gotten to the point where there is an overwhelming appetite for some reform."

Democrats won majorities in both the House and Senate in the Nov. 5 election, and many of them ran on promises to get tough with Dominion. Several dozen refused to take campaign contributions from the utility, which has long been the biggest single corporate donor to members of both parties.

Sen. Chap Petersen has introduced a measure for the January session that would ban all campaign contributions from public interest corporations such as utilities. Other measures aimed at imposing more controls on Dominion are in the works; a bipartisan coalition of advocacy groups has called for breaking up the utility's monopoly on power generation and restricting it to power transmission and distribution.

"I certainly would be open to that as long as we can ensure that electricity is delivered dependably and at reasonable rates," Ware said.

The measure proposed on Thursday is far narrower in scope. It simply "empowers the SCC to examine Dominion Energy's earnings, set its allowed profit level, and direct the monopoly to lower rates and issue refunds if it overcharges customers," according to a summary of the bill.

The sponsors noted that the commission has found that Dominion overcharged customers by more than $1.3 billion since the freeze went into place. They argue that the lack of rate review means Virginians' electricity bills no longer reflect simply the cost to produce and distribute energy, but include massive extra profits.

Critics say Virginians, by some measures, pay the seventh highest energy bills in the nation. Dominion contests that claim as leaving out many factors, and says Virginia's rates are in line with the national average.

The measure proposed by Ware and Jones would not address the utility regulation overhaul passed by the General Assembly in 2018, which restored some commission oversight but allowed Dominion to use excess profits to pay for renewable-energy projects instead of giving refunds to customers.

While that measure passed with bipartisan support, the utility's influence in Richmond continued to grow as a political issue.

"I get constituent calls about it regularly enough that it's become an issue that's not partisan anymore," Jones said.

That's a rarity today.

"I think both parties and all people of goodwill have a stake in having fair utility regulation of a monopoly public utility," Ware said.

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