When a billion dollars is not enough: Dominion tries a hostile takeover of the SCC

I’d call this a dog of a bill, but this is my dog, and she’s pretty darned cute.

For this bill, we really need a different animal altogether. Photo credit bmani/Creative Commons.

 

We have seen the future, and it looks suspiciously like the past.

I’m referring, of course, to the much-anticipated legislation Dominion Energy Virginia’s friends are peddling in the Virginia legislature to replace the infamous rate rip-off of 2015 with a brand new way for utilities to skip regulatory oversight and avoid giving refunds.

Personally, I have to hand it to Dominion on this one. Its lobbyists spent the fall trying to convince legislators not to reverse the brilliantly—though falsely—named “rate freeze.” Dominion hoped legislators would ignore estimates that the utility would keep northwards of a billion dollars in unearned profit from it, not to mention the barrage of newspaper articles connecting Dominion’s campaign contributions to the votes of legislators in support of the law. Apparently, a lot of legislators made it clear they were done being snookered, because by December, Dominion had publicly announced that it, too, believed it was time to change the law.

So Dominion had a PR disaster on its hands, and what did it do? Offer massive refunds and a return to regulatory oversight? Heck, no. The new bill allows Dominion to avoid regulatory oversight pretty much forever, while rebating just a fraction of the loot. Awesome head fake, guys!

Mind you, there are a lot of great buzzwords in the bill. If you didn’t know any better—if you happen to be one of this year’s snookerees, as the rank-and-file legislators are meant to be—you might think this bill is intended to transform the grid and add massive amounts of solar energy and energy efficiency. It could have been written to do that, but it wasn’t.

For a fuller explanation of this legislation and how it fits into the long pattern of Virginia legislators giving away the store to Dominion, see this terrific analysis from Dan Casey of the Roanoke Times. As he demonstrates, this is not legislation aimed at transforming the business of energy in Virginia. It’s aimed at ensuring Dominion gains unfettered control.

If legislative leaders are serious about transforming our energy economy, they could amend the bill now to give the State Corporation Commission back its role in protecting consumers from unwise spending and by ordering refunds and rate reductions when utilities collect more than permitted by law. The current draft of the bill throws a small fraction of past overearnings back to customers, ignores 2017 overearnings altogether, and allows utilities to game the system so rates can only go up hereafter.

Grid transformation is indeed important—so important that it shouldn’t be left to profit-seeking utilities to decide what grid investments are in the public interest. This issue needs an independent study with in-depth analysis and extensive public input– the sensible approach that has been taken by numerous states across the country. Letting Dominion decide what investments to make guarantees we’ll see only the ones that allow Dominion to tighten its control over Virginia’s power supply.

The bill also tries to buy off environmentalists with a promise of up to 4,000 MW of solar by 2028, a figure that was already in play (and appears in other bills this year) as a result of negotiations between utilities and the solar industry. To put that in context, recall that The Solar Foundation analysis showed Virginia needs 15,000 MW of solar to equal just 10% of our electricity supply. Do the math: 4,000 MW is well under 5% under the best of circumstances. When a bunch of other states are getting 20% of their electricity from wind and solar resources today, the promise of less than 5% over ten years is not only grossly inadequate, it’s insulting. Perhaps we environmentalists can be bought, but not that cheaply.

But will legislators wise up in time? Senate Minority Leader Dick Saslaw’s version of the legislation (there are several), SB 967, runs for 22 pages of mind-numbing detail that can’t be fully understood by anyone but a lawyer specializing in electric utility regulation. I’m not one, and I’m grateful for the help of people who are. Saslaw’s bill was introduced Friday—the last possible day to file legislation—and did not appear online until Tuesday. The Senate legislation may come before the Commerce and Labor committee as soon as Monday, and House versions may be in subcommittee on Tuesday.

Not everyone is being snookered, to be sure. Senator Chap Petersen has renewed his earlier effort for a more straightforward repeal of the “rate freeze,” and a bipartisan group of 11 senators have fired off a letter to the SCC asking for a report on what effect the various bills will have “on refunds owed to rate payers for past payments” and “the effects on future rates.” Six House members have done the same.

Finally, this afternoon Governor Northam weighed in, saying he has “significant concerns about the bill that is on the table.” An email from the Governor’s office laid out goals that echo what critics have been saying. First, more money should be refunded to ratepayers. Grid modernization should be defined, the focus on clean energy increased, and the SCC should be involved to make sure Virginians “are getting the best bang for the buck.” And perhaps most critically, the legislation should “restore the SCC’s authority to ensure that Virginia families and businesses do not pay more for power than they should under state law.”

Perhaps having the Governor weigh in will put a stop to the plan to turn electric utility regulation over to the monopolies themselves. Associated Press reporter Alan Suderman quotes Dominion spokesman David Botkins as saying by way of response that the legislation is a “work in progress.”

But why is this up for negotiation? Legislators should insist on a return to regular order, put an independent agency in charge of grid transformation, and set mandatory targets for decarbonizing our electricity supply. It’s time for the snookering to stop.

McAuliffe, on his way out, makes his bold move on climate–and drives Republicans crazy

Governor Terry McAuliffe signs an Executive Directive on climate.

Terry McAuliffe dangled climate bait in front of Virginia Republicans, and they swallowed it hook, line and sinker.

Three weeks ago Governor McAuliffe announced he was directing the state’s Department of Environmental Quality (DEQ) to develop a rule capping greenhouse gas emissions from power plants. His Executive Directive gives DEQ until the end of December to put out a draft rule for public comment—meaning McAuliffe will be out of office before any rule takes effect, and its fate really lies with the winner of November’s gubernatorial election.

Democratic contenders Ralph Northam and Tom Perriello praised the initiative, but Republicans were too much in campaign mode to react rationally. Instead they went ballistic, ensuring that climate change will be an election issue in Virginia for the first time. Ed Gillespie, the frontrunner in the Republican primary, denounced the directive as “job killing and cost-increasing,” and used the opportunity to make common cause with coal companies. Corey Stewart called global warming “obviously a hoax” and promised to restore the taxpayer subsidies Virginia once lavished on the coal barons. Frank Wagner used his status as a state senator to convene a committee hearing so he could inveigh against McAuliffe’s directive.

Last week President Trump further elevated climate as an issue when he announced he was pulling the U.S. out of the international climate accord. ExxonMobil and ConocoPhillips criticized the move, but the Republican Party of Virginia celebrated it with a “Pittsburgh, not Paris” rally at the White House.

Only Virginia and New Jersey will elect governors in 2017, so our election is widely regarded as a bellwether for the 2018 federal electons. With almost 60% of Americans backing the Paris accord, Trump’s pullout—and the choice of Virginia Republicans to embrace an unpopular president over a divisive decision—makes McAuliffe’s directive look like a winning move for Democrats.

It is long past time for climate to become an important issue in national discourse. On the other hand, it’s painful to see it used as a political cudgel in partisan fights, and even worse to see Republicans double down on denying that a threat exists or that we have the tools to address it. Climate change is not something that happens only to one party’s target voter demographic. God sendeth the rain on the just and on the unjust. We are all in this together.

To be fair, there are Republicans who take climate change seriously and believe we need to address it. Unfortunately, the ones who hold elected office rarely have the courage to say it. Their party does not have their backs.

Political clickbait or not, the climate rule McAuliffe envisions is conceptually simple and economically efficient. It would have DEQ set greenhouse gas emissions limits from power plants pegged to those of the eleven states that currently regulate emissions, with a goal of enabling our utilities to trade emissions allowances with utilities in other states.

In effect, Virginia utilities would trade with those of the northeastern states that are members of the Regional Greenhouse Gas Initiative (RGGI), but Virginia would not actually join RGGI. That’s too bad; joining RGGI would let the state auction emissions allowances instead of giving them away, bringing in money for climate adaptation and clean energy programs. According to Deputy Natural Resources Director Angela Navarro, however, joining RGGI would require passage of legislation. Republicans in the General Assembly have blocked such legislation for the past three years in a row.

Auction revenue would be welcome, but the carbon reduction plan still makes sense. Navarro told me the RGGI states are currently achieving reductions of 2.5% year over year and driving clean energy investments. Using this approach would enable Virginia to achieve the 30% by 2030 reductions that the environmental community has been urging. It would also put Virginia in a stronger position when the U.S. eventually adopts nationwide carbon limits. Indeed, McAuliffe’s plan looks better than the Clean Power Plan the Trump administration is trying to scuttle, which applies only to existing power plants and might allow unlimited construction of new fracked gas plants.

A market-friendly cap-and-trade approach is the kind of solution that would appeal to Republicans, if they cared to get into the solution business. Unfortunately, Senator Wagner’s response is likely to be typical of what we can expect from Virginia’s Republican General Assembly when it reconvenes in January 2018. The ink was barely dry on McAuliffe’s directive when Wagner called a meeting of the Joint Commission on Administrative Rules to give himself a pre-primary platform to attack the climate initiative.

Wagner expected a member of the Administration to attend the meeting so he’d have someone to lecture—but wouldn’t you know, it turned out that every single Administration official with any connection to the issue was busy that day. That did not stop Wagner and his fellow Republicans from attacking McAuliffe’s directive as expensive and potentially unconstitutional. (Attorney General Mark Herring had released an opinion the previous week supporting its constitutionality.)

Democrats on the committee were unimpressed with Wagner’s grandstanding, and complained of being summoned to review a rule that hadn’t even been drafted yet. Even more to the point was the testimony from Virginia residents who came to speak in favor of climate action, not as a matter not of politics, but of public health. Dr. Janet Eddy of Virginia Clinicians for Climate Action and Dr. Matthew Burke of the Medical Society Consortium on Climate and Health described how a warming climate means more asthma and heat stroke, longer allergy seasons, and the northward spread of malaria and other infectious diseases.

These are serious problems, and they deserve serious attention. The Republican Party line that global warming isn’t happening, it isn’t our fault, and we can’t afford to stop has all the coherence of the thief who tells the judge he didn’t steal anyone’s wallet, and anyway there wasn’t much cash in it (and he can’t mend his ways because he has a gambling addiction).

Virginia voters will go to the polls on Tuesday to choose their party’s nominees for statewide office and the House of Delegates, so citizens are thinking about the issues that matter to them. The good news is that this year, climate may finally be one of them.

Dominion Power defends its billion-dollar handout from ratepayers; squashes dissent; asks for more.

DominionLogoA Senate committee quickly killed SB 1095, a bill introduced by Chap Petersen (D-Fairfax) that could have brought an early end to a five-year prohibition on regulators’ ability to review Dominion Virginia Power’s earnings and to order refunds where warranted. The prohibition, passed two years ago as part of 2015’s SB 1349 (Frank Wagner, R-Virginia Beach), will mean as much as a billion dollars in extra cash to the utility—money that would otherwise be returned to customers.

After losing the vote on SB 1095 in Senate Commerce and Labor, Petersen introduced SB 1593, a bill that would have prohibited campaign contributions from public service corporations like Dominion Power. He was forced to withdraw the bill when Senate leaders complained he had filed it late.

Score two for Dominion. But in case you thought the utility giant might choose to lie low for a while, consider another of this year’s bills: HB 2291 (Terry Kilgore, R-Gate City). The legislation allows Dominion to seek approval to charge customers for billions of dollars in nuclear power plant upgrades. Kilgore has collected $162,000 in campaign contributions from Dominion’s parent company over the years, even though he represents an area of the state that is not served by Dominion Virginia Power (meaning it won’t be his constituents paying for his bill). Astoundingly, the bill passed the House of Delegates with only two dissenting votes (cast by Mark Keam, D-Vienna, and Sam Rasoul, D-Roanoke).

Obviously, there is a pattern here. It actually began at least as far back as 2014, when another Kilgore-sponsored bill passed allowing Dominion to shift onto its customers several hundred million dollars of nuclear development costs that otherwise would not have been recovered for many years, if ever. The legislation inspired much criticism, but little action.

Taken together, these legislative giveaways add up to enormous sums of money. The 2015 legislation involved as much as a billion dollars in customer payments that exceed the profit margin allowed by the State Corporation Commission, according to an estimate offered by one commissioner. In the absence of SB 1349, Dominion would likely have had to issue refunds, lower rates, or both.

At the time, Dominion claimed that the EPA’s proposed Clean Power Plan would impose huge costs on ratepayers unless the General Assembly acted to stop base rates from rising. Legislators weren’t told the real effect of SB 1349 would be to keep base rates from falling. And meanwhile, customers’ utility bills could continue to rise because base rates make up only a portion of monthly bills.

Petersen’s bill this year took notice of the fact that the Clean Power Plan is now highly unlikely to take effect. SB 1095 would have reinstated the SCC’s authority to review rates if and when the Clean Power Plan was deemed truly dead. This misses the mark only in being way too generous to Dominion. As the SCC has pointed out, the review freeze period will be over before the Clean Power Plan is slated to take effect, so SB 1349 could not possibly protect ratepayers from compliance costs anyway.

SB 1349 is currently being challenged in court as an unconstitutional abrogation of the SCC’s power. Two former Attorneys General, Republican Ken Cuccinelli and Democrat Andy Miller, have weighed in on the side of consumers. The current Attorney General, Democrat Mark Herring, was harshly critical of the bill when it was before the General Assembly, but now says he is obligated to defend the law.

SB 1349 passed the General Assembly two years ago amid great confusion about what was in the bill and what it all meant. Legislators padded it out with modest solar-energy and energy-efficiency provisions to make it palatable to skeptical Democrats and ensure it would be signed by Governor McAuliffe.

But this year, legislators have no such excuse. They cannot have missed the torrent of criticism the law inspired, or the point that Dominion won’t spend a dime of its ill-gotten gain on compliance with the Clean Power Plan. It is hard to see the 9-2 vote in Commerce and Labor to kill Petersen’s SB 1095 as anything but a blatant, bipartisan gift to Dominion. (The dissenting votes came from Republicans Dick Black and Stephan Newman.)

Dominion’s corrosive effect on Virginia politics is one of the main threads of a book published last year called Virginia Politics & Government in a New Century: The Price of Power. Author Jeff Thomas outlines a whole host of ways in which Virginia politics have become mired in corruption. SB 1349 is Exhibit A.

Now the unearned largesse for Dominion—and the ignominious end to Senator Petersen’s effort to rein in Dominion’s influence—have become an issue in this year’s governor’s race. Republicans Denver Riggleman and Corey Stewart and Democrat Tom Perriello are all taking aim at the connection between Dominion’s campaign spending and the billion-dollar boondoggle it received from SB 1349. If Kilgore’s HB 2291 passes the Senate this month, they will have another example on which to build their case that Dominion’s campaign donations have corrupted Virginia’s legislative process.

Legislators themselves publicly reject the idea of a causal relationship between the steady stream of campaign cash and their votes in favor of the bills, while privately acknowledging the sway Dominion holds over the General Assembly. Indeed, the comfortable fiction that campaign donations don’t affect a politician’s votes is such an insult to voters’ intelligence that the wonder is why it took so many years to become a campaign issue.

Given Wagner and Kilgore’s leadership roles in the Republican-controlled House and Senate, the issue might not seem like obvious fodder for the Republican primary campaign. Of course, Wagner is also running for governor on the Republican ticket, so the assaults of challengers Riggleman and Stewart might simply be tactics designed to undermine the competition. If voters respond, though, we can expect to hear a lot more discussion of government corruption.

In today’s chaotic political environment, Democrats who don’t speak out could find themselves under fire, too. Lieutenant Governor Ralph Northam, the other Democrat running for Governor, has accepted over $97,000 from Dominion since 2008, according to VPAP.org, and so far seems not to have joined the chorus of voices criticizing Dominion’s influence.

The anti-corporate sentiments that fueled Bernie Sanders’ campaign have only intensified with Donald Trump’s embrace of bankers and oil barons. Democratic voters today are less likely than ever to forgive leaders of their own party for cozying up to big corporations. If either Democratic candidate for governor cedes the issue of clean government to the other—or to Republicans—this might be the election in which it matters.