Del. David Toscano on His Vote Against the Dominion Bill

Interesting analysis of the “Dominion Bill” from House Democratic Leader David Toscano.

Vote on the Utility Rate Bill

February 27, 2018

On Monday, February 26, 2018, the House passed SB 966, one of the most significant bills we considered this year, by a 65-30 margin. I voted against the bill. The bill was proposed largely in response to the so-called “Rate Freeze Bill” enacted several years ago.

As I have written previously, utilities had been “overearning” for the last several years and the bill would provide not only for refunds, but a new way by which the utilities could invest in modernizing the grid.

When the bill was first introduced, it had serious flaws, including a provision allowing the utilities to, in some cases, collect twice for the same investment. This was the so-called “double dip,” and I successfully offered an amendment on the House floor that removed it. The same amendment was placed on the Senate bill.

The Benefits
Few would argue that there are some substantial benefits derived from this bill:

1. Dominion customers will receive $200 million in refundsover the next two years.
2. Dominion customers will receive an immediate rate reduction of at least $125 million based on benefits the utilities will derive from the new federal tax legislation.
3. Renewable energy will be strongly supported, with 5,000 megawatts of wind and solar being declared as “in the public interest,” an arcane necessity in order for the SCC to approve major renewables investment.
4. Dominion’s popular Energy Share Program, which assists low-income families with the payment of their utility bills and home weatherization improvements, will be extended and expanded to include another $120 million in funding from shareholder profits.
5. Dominion will invest almost $1 billion in grid modernization and energy efficiency.

The Concerns
While our efforts to improve the bill have largely been successful, particularly in eliminating the “double dip,” problems remain, including:

1. The $200 million overearnings refund figure may be less than what the State Corporation Commission might return to consumers if they did a full analysis of the utilities overearnings.
2. The State Corporation Commission’s ability to control rates is restricted.
3. Any future rate reductions may have to wait much longer than if the State Corporation Commission immediately resumed regulation of rates.
4. Costs incurred for utility undergrounding are deemed “reasonable and prudent” without knowing the actual costs of undergrounding projects, or whether any given project is cost-effective; while some undergrounding costs are capped and the program sunsets in 10 years, concerns remain that the SCC will not have sufficient authority to review and determine the appropriateness of such initiatives, thereby preventing rate payers from receiving additional refunds.
5. The targets for renewable energy generation and use may actually be reached without the need for this bill, given how the market is changing.

Who Will Control Grid Transformation?
I have spent a lot of time during this session listening carefully to the views and input of my constituents, environmental experts, the utilities, the SCC and the Attorney General’s office, and advocates for consumers and for our lower-income citizens. Ultimately, my decision to vote against the bill involved answering the question of “who will control the transformation of our electrical grid?” There is no doubt that our utility grid needs to be modernized, and that renewable energy technology (including energy storage) is dramatically changing the space. As this bill is written, even with the committee amendments we adopted, the utilities largely control how that transformation will occur. While their knowledge and their financial stake should play an important role in these decisions, transformation of our grid should not remain exclusively in private hands; the public should have a central role, and the only way that can happen in Virginia is through the State Corporation Commission, which has the expertise to review utility proposals and determine whether they are in the public interest. To be sure, we need our utilities to be active participants in the process; their infrastructural strengths cannot be underestimated. Many utility executives understand the rapid transformation that is occurring, and have the ability to work with public regulators to make the best choices. But the public regulators need to be at the table, controlling the process to ensure the public interest is served. And this bill constricts the SCC’s role too much.

A number of states, including New York and Minnesota, are recognizing the importance of transforming the grid and have established elaborate public processes to determine how best to do this. We would benefit by setting up a similar process in Virginia. We also need our State Corporation Commission involved in that process, willing to look anew at the energy market and how it is transforming before our eyes.

While this bill has now passed, these debates will not end. I will continue to work on these energy system transformation issues because they are critically important to the future of our Commonwealth.