The Democrat-controlled Virginia Senate passed legislation Feb. 7 that would adjust the way state regulators set and oversee Dominion Energy’s electric rates and profitability.
The bill that cleared the Senate in a 27-13 bipartisan vote differs substantially from a companion House measure, which also passed that full chamber on Feb. 7. The developments mean the legislation is likely headed to a conference committee, a small group of lawmakers from both chambers who would meet to resolve the differences.
The bill “is just a marker from our position, which will be contrasted and debated with the bill coming out of the House of Delegates,” said Senate Minority Leader Tommy Norment.
Both versions of the legislation as introduced initially contained provisions that effectively would have bumped up the company’s return on equity, a measure of profitability that is set by the State Corporation Commission. Dominion has said the resulting change would be reasonable and would help keep the company competitive as it seeks to raise money for the billions worth of renewable energy projects it has committed to building, including its massive offshore wind farm.
Despite the legislation being sponsored by leaders of each respective chamber, it has drawn opposition from a coalition of environmental groups, big businesses and ratemaking reform groups.
Last week, the House stripped the return on equity provision out of its version of the bill. The Senate version, after being amended Feb. 6, is more generous to the company.
It would leave the return on equity provisions in place, but only through the end of 2027.
“The State Corporation Commission will have some oversight, but we’re also trying to move through that period of time for the development of wind power,” Norment said in explaining his proposed amendment adding the sunset language, which was ultimately adopted.
Democratic Sen. Chap Petersen argued against Norment’s amendment and tried unsuccessfully to offer his own competing proposal.
“The bottom line is: We have tied the hands of our State Corporation Commission, which at the end of the day has cost our consumers dollars,” Petersen said.
The way rates are set for the state’s largest electric utility as well as the authority regulators have to adjust them is a perennial issue at the General Assembly. In recent years, the company has pushed through legislation that minimized the chances that it would have to lower its rates. That’s despite regulators having routinely found that the utility’s rates provide excessive profit.
The Senate measure still contains a provision that would roll $350 million worth of charges in what are called rate adjustment clauses, or riders, into base rates. The company has said doing so will lower the average customer’s bill by about $6 to $8 a month.
The bill would also increase the frequency of Dominion’s rate cases before the State Corporation Commission, moving them from every three years to every two, and would give the commission additional discretion to adjust rates as they see fit.
Unlike the House version, the Senate’s bill would allow the company to issue bonds to spread out upcoming fuel cost increases — which the company says are attributable largely to the war in Ukraine — over a 10-year period, adding interest but averting customers from bearing the spike all at once.
“Without this bill, rates will go up $17 a month on the average (electric) bill,” Saslaw said Feb. 7, citing an estimate the company has provided about the impact of that portion of the measure.
A Dominion spokesman declined to comment Feb. 7 beyond a previous statement, which said the company supports “comprehensive legislation that provides immediate relief for our customers, stronger SCC authority and a simpler regulatory process.”
The House version passed that chamber Feb. 7 on a 52-47 floor vote.
-SARAH RANKIN, Associated Press