Dominion's Power Wanes in State Capitol; "Rate Freeze" Bill Amended by Reformists

By Corrina Beall Legislative and Political Director

An incredible series of events culminated this week in a major upset on the Floor of the Virginia House of Delegates, and delivered a win to reformers seeking to break Dominion Energy’s stranglehold on the General Assembly.

Dominion has long reigned in the Virginia legislature. The utility giant is the largest corporate donor to candidates of both parties, boasting nine registered lobbyists and an additional 13 on retainer^[1]. Dominion writes its own bills that benefit the company and its shareholders and ushers them, efficiently and expertly, through the legislative body. Year after year, Dominion bills come before the General Assembly and are codified in law regardless of their impact on Virginians, or the State Corporation Commission’s constitutional authority to check monopoly power. This outsized influence over Virginia’s energy policy negatively impacts those who pay an electricity bill to Dominion as well as those in other regions of the state by setting standards that favor corporate polluter interests over the public good and consumers.

This year’s Dominion bill, the “Grid Transformation and Security Act,” seeks to re-write the state’s regulation of monopoly electric utilities. Defended by its proponents as a fix to the wildly unpopular “rate freeze,” the bill actually seeks to allow Dominion to keep billions of dollars in excess earnings rather than return it to ratepayers, and then to plow that cash into new infrastructure and also bill customers for the cost: a “double dip.”

However, on the eve of Crossover, the House of Delegates passed its own version of the bill with a key amendment carried by Del. Toscano that stripped out the “double-dip.” Virginia’s newly emboldened Democratic House Caucus, having grown from a near super-minority to one seat shy of holding the same number of votes as House Republicans in the “blue wave” election of 2017, actualized its  power on the floor with  all 49 votes cast for the amendment. Six Republicans joined them, making the vote count 55-41, with two abstaining. Seeing the vote tally, Del. Habeeb called for a do-over, and urged his 41 colleagues to change their votes and support the amendment. They did.

“This moment represents a curtain call on Dominion's time of outsized influence over the General Assembly.”

The unlikely coalition of 55 rural conservatives and metropolitan-area liberals share a growing resentment of Dominion’s excessive influence and abuse of power. The new assertiveness injected into a typically staid process comes from twelve freshman Delegates who pledged^[2] to refuse campaign contributions from Dominion. Those individuals held firm to their campaign trail promise to question Dominion's role within the General Assembly, and brought a greater will to challenge Dominion on its own turf. As the sole incumbent to take the pledge, Del. Rasoul provided invaluable leadership to the junior reformers, introducing rival legislation and starting a People’s Caucus^[3] focused on reducing corporate money in state politics. 

Dominion must have recognized early in 2017 (around the time that gubernatorial candidates called them out in Capitol Square^[4]) that the "rate freeze" boondoggle would haunt them until it was put to rest. For those who don’t recall, “rate freeze” legislation enacted at Dominion’s behest in 2015 stripped authority from the State Corporation Commission to review monopoly utility electric base rates and order refunds of overcharges. Base rates were frozen at a higher-than lawful rate of return, making passage of this bill extremely profitable for Dominion. 

Sen. Petersen, one of Dominion’s most vocal critics in the Senate, introduced a bill to repeal the “rate freeze” in 2017^[5] and made an early commitment to re-introduce the bill in 2018. This increased Dominion’s urgency to sweep the issue under a rug. 

Toxic coal ash pollution leaching into our waters, a massive, widely opposed fracked-gas interstate pipeline, and the 2015 “rate freeze” all focused increasingly condemnatory attention on Dominion. This pressure cooker environment built gradually, heated by grassroots voices, candidates for public office, and increasing media attention. It positioned this year’s unlikely coalition of reformists, and set the stage for Dominion to suffer an unprecedented public defeat. The “double-dip” amendment vote in the House of Delegates is a signal that business as usual is over. Reformists checked Dominion's outsize influence within the General Assembly and amended a terrible bill to make it better for both the environment and ratepayers.

The Sierra Club Virginia Chapter has been in this fight from the beginning. We are the only energy policy focused environmental organization that did not support the 2015 “rate freeze,” legislation,  and we have spent years challenging Dominion's outsized influence. Our membership has been vocal in calling for both an end to the “rate freeze,” and for energy policy that moves us toward a clean energy future. Consumer and environmental advocates, along with clean energy businesses and other stakeholders including the Sierra Club Virginia Chapter, joined forces this year with new reformist and veteran champion legislators to push back on Dominion’s agenda. The amendment itself was drafted and shopped by a coalition of environmental and consumer groups, including the Sierra Club Virginia Chapter.

The amended bill is very different from what was originally introduced. Anyone who pays an electricity bill in Virginia would have been negatively impacted by provisions included in the first version.  The most damaging provisions have been removed from the amended bill. It now  provides real incentive for Dominion to invest in renewable energy and mandates investment in energy efficiency.

Sierra Club does not agree with everything in the bill and we cannot support it, but we acknowledge that significant improvement has been made over the past six weeks. So, on Tuesday, after much deliberation, we adopted a neutral position on the amended “Grid Transformation and Security Act.” 

You can find a detailed side-by-side comparison of what the amended “Grid Transformation and Security Act” will do here, alongside current statute. (Thanks to Virginia Poverty Law Center and Southern Environmental Law Center).

As amended, the bill will:

• Require Dominion to return over-earnings roughly equivalent to what they over-collected in 2015 and 2016 if coal ash remediation costs are factored.
• Direct the SCC to resume utility rate cases, but it will conduct the reviews every three years instead of every two years. The next SCC review of Dominion’s rates will take place in 2021 and will audit years 2017-2020.
• Prohibit the SCC from raising base rates for 10 years.
• Give SCC the authority to both lower rates and issue refunds at every rate review, a change from prior law permitting refunds at every-other review. However, customer refunds and base rate reductions are unlikely because Dominion will be allowed to reinvest any excess profits in modernizing the grid or renewable wind or solar energy.
• Cap grid modernization infrastructure investment at 50% of offset spending; for every dollar of profit Dominion spends on improving the grid, it must spend a dollar on wind or solar energy.
• Require that all projects, with the exception of undergrounding power lines, be reviewed and approved by the SCC before they are initiated.
• Define several projects as “in the public interest,” a factor that improves the likelihood that the SCC will approve the project. Increases renewables in the public interest from 500MW to 5,000MW.
• Not allow Dominion to charge customers twice for the projects.
• Not allow Dominion to pocket 30% of offset spending. Dominion keeps 30% of over-earnings when the SCC makes a determination to issue refunds to customers.
• Require Dominion to boost its EnergyShare program by $13 million a year paid for by shareholders and extend the program through 2028. EnergyShare provides bill payment and weatherization assistance for customers who are low-income, elderly, disabled or veterans.
• Require Dominion to file $870 million worth of energy efficiency programs through 2028.
• Ratepayer Impact Measure (RIM) test will no longer be a barrier to energy efficiency projects before the SCC.