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In General Assembly, suspicions and promises raised over electric rate change

An electric rate reform that nobody’s seen — but that everyone was talking about Monday as a Senate panel declined to repeal Virginia’s controversial rate freeze — is raising both suspicions and promises in the General Assembly.

Critics who say the 2015 freeze on electric utility rates locked in unfairly high power rates believe Dominion Energy, the state’s biggest utility and a political powerhouse in Richmond, is maneuvering to fend off growing pressure for rate cuts or refunds.

But the chairman of the state Senate Commerce and Labor Committee, state Sen. Frank Wagner, R-Virginia Beach, said he’s working on a proposal that will bring what he described as a substantial refund.

Wagner said he was working on a reform measure even as the committee killed a proposal by state Sen. Chap Petersen, D-Fairfax, to repeal the freeze.

For many outside the committee, suspicions about Dominion and its plans are high — especially after a State Corporation Commission report found that the state’s biggest power company earned excess profits of $426 million in 2016. Several of the newly elected Democrats in the House of Delegates, who came close to ending 18 years of GOP control, ran campaigns calling for reforms to curtail Dominion’s profits and influence in the General Assembly.

“Dominion (Energy Virginia) has a vice grip on this committee,” Petersen said, speaking after the panel killed his proposal to repeal the freeze.

But committee members bristled at the criticism.

When Louis Monacell, a longtime advocate for big industrial electricity users, urged the committee to vote to repeal the freeze instead of passing “a Dominion bill” that hasn’t surfaced yet, Senate Minority Leader Dick Saslaw, D-Springfield, fired back.

“There is no Dominion bill,” said Saslaw, who is working with Wagner on a bill.

“What’s going to be in it is what we put in it.”

Wagner said later he plans to announce details this week.

He offered some hints, though.

After the committee session, he said he expects the bill would result in refunds.

It would do away with the freeze and return Dominion, the state’s biggest utility, and Appalachian Power, which serves much of the western part of the state, back under SCC regulation.

That means the regular review of the utilities’ financial results with an eye to seeing if they need to be cut or increased.

But Wagner said several times that he’s concerned about big investments utilities need to make in the electric grid — the wires connecting power plants with customers.

He’s also concerned about investments utilities will need to make in renewable energy.

While the federal Clean Power Plan that prompted legislators to enact the rate freeze in 2015, hoping to give Dominion a financial cushion to manage a big, sudden demand to cut greenhouse gas emissions, is a dead letter now, Wagner said the state has an ambitious plan of its own.

That plan calls for cuts in carbon emission of 3 percent a year for the next 10 years, he said.

Financing that will be a challenge for utilities, he said.

“They need to count on a reliable stream of revenue,” he said.

And, he said, those investments will need to be added to Dominion’s rate base — that is, the accumulated costs of building its system, which with an SCC-approved profit, its rates are supposed to recoup over time.

Critics, ranging from big companies like Newport News Shipbuilding to advocates for low-income Virginians to Petersen and conservative Republican state Sen. Amanda Chase, of Chesterfield, say Dominion’s profits are too high and the excess should be refunded.

On top of the excess earnings that the SCC reported, Dominion is looking at a $150 million windfall from the tax cuts Congress just enacted, Petersen said.

“On Election Day, I heard from Republicans, Democrats and independents: do something about the rate freeze,” Chase said.

Dominion says its rates are more than 3 cents a kilowatt-hour below the East Coast average and almost 2 cents lower than the national average.

It says that over the past decade, the combined effect of a 2007 bill to re-regulate its rates and the 2015 rate freeze has cleared the way for construction of five new power plants, slashed purchases of power from out-of-state plants and resulted in a roughly 20 percent drop in carbon emissions.

Dominion officials did not speak at the committee on Monday, but they are expecting some kind of regulatory change this year.

“The General Assembly may wish to consider a reinvestment model, where in years when there are excess earnings, they are reinvested in modernizing and transforming the electricity grid, similar to how the commonwealth sets guidelines for use of a budget surplus. Adopting this reinvestment approach would require lifting the base rate freeze enacted in 2015,” company spokesman David Botkins said.

Also Monday, the Senate Courts of Justice Committee voted to increase the trigger that turns theft and other property crimes into felonies from $200 to $500. Virginia and New Jersey have the lowest triggers for felony larceny in the nation.

Neighboring Maryland, North Carolina and West Virginia all set their triggers at $1,000, while Kentucky and Tennessee have $500 triggers.

Virginia set its trigger at $200 some 37 years ago, back when a loaf of bread cost about 50 cents.

The courts committee once again killed proposals for universal background checks for gun purchases, limiting the size of ammunition magazines and making it a misdemeanor to carry a loaded weapon in a public place while intoxicated.

But after emotional testimony from Richmonder Cortney Carroll about the horrors she experienced at the Las Vegas concert mass shooting last year, the panel approved a measure making devices like bump stocks and trigger cranks illegal.

The committee, at the request of state Sen. Creigh Deeds, D-Warm Spring, closed a loophole that allowed people who had been committed for mental health treatment as minors to buy guns after they turned 18.

Ress can be reached by telephone at 757-247-4535

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