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Va. legislation calls for bigger Dominion Energy refund, but does it lock in higher rates?

Negotiations through the weekend on a new electric utility oversight law yielded a bigger promised refund from Dominion Energy Virginia, but the core of a bill that consumer advocates say locks in high electricity rates remains unchanged.

That refund would now total $200 million instead of an original proposal of $133 million, as part of a package of changes agreed to by power companies and several critics of a sweeping regulatory change the companies have been urging.

Convened by Gov. Ralph Northam, the talks also won a promise that Dominion would pass on $125 million a year in savings resulting from the new federal tax law, as well as big increases in solar and wind plants and energy efficiency programs.

“This compromise puts more money in ratepayers’ pockets, ensures real oversight of utility rates, paves the way for significant upgrades to Virginia’s electrical grid and mandates historic investments in energy efficiency and clean power,” Northam said, moments after a panel of the state Senate’s Commerce and Labor Committee approved the measure.

At the core of the bill is a new approach to utility profits that exceed the targets state regulators say are fair to both ratepayers and investors in monopoly power companies. Before the General Assembly froze utility base rates in 2015, any excess was to be returned to ratepayers, and could trigger rate cuts. Shortfalls could justify rate increases.

The bill approved Monday by the Commerce and Labor Committee, and a parallel bill pending before the House Commerce and Labor Committee, would allow utilities to use excess earnings to finance spending of hundreds of millions of dollars a year on renewable energy plants and investments to make the state’s electric grid less vulnerable to storms and better able to handle to ebbs and flows of electricity that would result as solar and wind plants generate a larger share of Virginians’ electricity.

Those investments could amount to about $200 million a year for the next decade, said state Sen. Frank Wagner, R-Virginia Beach, one of the bill’s two main sponsors.

Recalling his days running a shipyard in Newport News’ small boat harbor, Wagner said he was willing to pay more for better service.

“I was paying $13,000 or $14,000 a month. … We’d have outages all the time and they’d shut us down. It cost me $10,000 a hour to have the shipyard go down,” Wagner said. “That’s the kind of thing we’re talking about here.”

He said the bill was needed because the State Corporation Commission did not always follow General Assembly policy directions and had resisted efforts to boost renewable energy programs.

But consumer groups — representing some of the biggest and smallest of Dominion’s customers — still don’t like the approach.

“There is no reason to overcharge customers in order to build important and indeed critical infrastructure,” said Ed Petrini, a lawyer representing an association of large industrial users.

And Dana Wiggins, of the Virginia Poverty Law Center, said she is concerned that the way the bill would finance the investments Dominion plans would in effect be double dipping — withholding refunds consumers would otherwise be due while adding those investments into the base of assets whose cost Dominion recovers from its rates.

While Northam endorsed the bill, state Attorney General Mark Herring’s office did not.

“It is our belief that customers will essentially pay twice” for renewable power and improvements to the grid, Deputy Attorney General Samuel Towell said.

State Sen. Bill Stanley, R-Moneta, said that’s the way he reads the bill, too. He was one of three committee members who had supported the rate freeze in 2015, thinking it would protect customers from forecasts of big increases in electricity bills because of federal efforts, since dropped, to cut carbon emissions.

“I just can’t get past the fact that we’re not giving money back to ratepayers and we’re not giving the SCC the oversight the SCC should have,” said state Sen. Richard Stuart, R-Montross.

But Senate Minority Leader Dick Saslaw, D-Springfield, who with Wagner is a co-sponsor of the bill, said the SCC would have oversight and that Dominion was not double-dipping by using excess earnings to fund investments in renewables and the grid.

“It’s not like they get to keep anything extra … it all comes out in the wash,” Saslaw said.

“This bill is about rates. It’s about keeping rates low and keeping rates stable” while Dominion embarks on a tenfold increase in renewable power and modernizing the grid, said company lobbyist Jack Rust.

In addition to the increased refund and the pass-through of utilities’ tax savings, the revisions to the bill would increase the solar and wind generating facilities that Dominion is pledged to build from 4,000 megawatts to 5,000, or enough to power roughly 500,000 homes, based on the Solar Energy Industries Association’s evaluation of the state’s climate and energy use. Dominion currently has 500 megawatts in place.

It would end the pre-freeze requirement that rate cuts could only come after two successive SCC reviews of utility rates, costs and profits show excessive earning and would rule out the possibility of a rate increase in the next review, which it set for 2021.

In addition, the revised bill would:

Require Dominion to put in place $870 million worth of new energy efficiency programs over the next decade.

Require that a controversial high voltage transmission line in Northern Virginia be placed underground.

Extend the company’s EnergyShare program, which helps low-income Virginians with their bills, for another decade and expand the program from $7 million to $8 million a year to $13 million.

Provide for a 2 percent reduction for large industrial customers.

The Senate Commerce and Labor Committee approved the revised bill by a 10-4 vote. Three of the four opponents, Stanley, Stuart and state Sen. Dick Black, R-Loudoun, had voted for the freeze in 2015. State Sen. Steve Newman, R-Lynchburg, opposed both the freeze and the revised bill.

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

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