New utility-backed legislation in Virginia would mean lower monthly bills in the short term but would still allow electric monopolies to charge rates that currently produce excessive yearly profits of hundreds of millions of dollars.
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A bipartisan group of lawmakers introduced a series of bills Friday they said would help customers by providing a refund, expanding solar power and improving the electric grid.
But the proposals were quickly panned by critics as a massive giveaway to the state's biggest electric utility and most politically powerful corporation, Dominion Energy.
The legislation largely undoes a 2015 Dominion-backed overhaul that suspended regulatory reviews of base rates, which make up a majority of a customer's bill. That law led to bigger profits for the utilities and prevents them from having to pass on any savings from recent federal tax cuts.
Under the new proposals, Dominion would refund customers $133 million for overpayments in 2015 and 2016. The state's second largest utility, Appalachian Power, would forgo $10 million of incurred fuel costs. Lawmakers said both companies would also pass on the federal tax cut savings.
Dominion would also forgo $25 million a year for 20 plus years for converting coal plants into biomass plants, which the company said would eventually add up to $1 billion in "customer benefits" when added with the tax pass-through and the $133 million rebate, according to company spokesman David Botkins.
"Customer bills would drop 6 percent immediately," Botkins said.
But the company stands to gain far more from how the legislation structures future rate reviews, which severely constricts regulators' ability to lower rates in the future.
As a regulated monopoly, Dominion is allowed to earn a fair profit on its expenses and currently regulators say the company's base rates are currently overearning by $400 million a year. The company said the figure is lower.
Such overearnings likely won't likely be an issue in future rate cases under the proposed legislation. The proposals would allow Dominion to count certain costs that are typically covered in separate kinds of rates — like a large increase solar energy development and electric grid upgrades — in its base rates.
And even if lawmakers did find overearning, the new legislation would limit their ability to order lower base rates until six years from now. The legislation lengths review periods to three years, and regulators would have to find that Dominion had earned excessive profits in 2021 and 2024 before it could order rates to be lowered.
Steve Haner, a lobbyist for the Virginia Poverty Law Center, said the proposed legislation would worsen, not improve, the effects of the 2015 law.
"This is a major step backwards for consumers," he said.
Dominion's push to overhaul electric rates comes amid a political shift in Virginia that's seen an increased focus on the company's influence by a growing number of Democrats and Republicans.
Virginia's regulatory environment is viewed as one of the most shareholder-friendly in the country.
But Del. Terry Kilgore, a Dominion ally and sponsor of one of the bill's introduced Friday, said that doesn't mean ratepayers aren't being served well, either.
"We want them to make money," Kilgore said, adding that a strong electric utility can help in recruiting other businesses to the state. "We don't want them teetering on the edge."