A bill that would undo the controversial 2015 rate freeze that locked in hundreds of millions of dollars in “overearnings” for Virginia’s two large utilities heads to a powerful Senate committee Monday — for an encounter it is not expected to survive.
Senate Bill 9 by Sen. Chap Petersen, D-Fairfax City, is scheduled to be taken up by the Senate Commerce and Labor Committee. The panel — stacked with lawmakers of both parties who are friendly to Dominion Energy and Appalachian Power — is expected to kill the bill and the rest of Petersen’s package, which would increase the membership on the State Corporation Commission from three to five and create other consumer protections.
Sen. Richard L. Saslaw of Fairfax, the senior Democrat on the committee and a major recipient of Dominion campaign contributions, said he is introducing his own bill by the end of the upcoming week, a piece of legislation he said Dominion will back.
Saslaw said he has not read Petersen’s legislation, which has a pair of Republican co-sponsors — Sens. Amanda F. Chase of Chesterfield and David R. Suetterlein of Roanoke County — and a companion measure in the House of Delegates.
In the Senate, the Commerce and Labor Committee is chaired by Frank Wagner, R-Virginia Beach, who carried the 2015 rate freeze bill. He is a reliable Dominion ally and another major recipient of the company’s campaign contributions. Wagner did not respond to a voicemail left on his cellphone Friday.
The committee also includes Senate Majority Leader Thomas K. Norment Jr., R-James City, and other Dominion-friendly lawmakers, such as Sen. Rosalyn R. Dance, D-Petersburg.
The influential energy giant has said it wants to move away from the 2015 law, which locked in base rates that SCC regulators say are allowing Dominion and Appalachian Power to pocket millions of dollars they would otherwise have to return to their ratepayers.
But Dominion is pushing its own solution in Saslaw’s bill, a measure that is expected to put forward a new rate review structure that includes a three-year base-rate review period instead of the former biennial review.
David Botkins, a Dominion spokesman, said the company opposes Petersen’s bills.
“There’s a more holistic and thoughtful approach to modernizing the grid system going forward,” he said. “There is legislation that reflects the input of numerous stakeholders that’s being worked on that would be a preferable alternative.”
Oversight of base rates would be returned to the SCC but with an important twist: Dominion wants money it spends on renewable energy, grid modernization and other projects to count against its earnings for the purpose of determining base rates.
Botkins said the legislation will include a “very significant rebate” for Dominion’s nearly 2.5 million Virginia customers. He said it also will allow the company to make crucial investments to guard against severe weather, incorporate more renewable energy and restore power faster after outages, among other benefits.
Petersen responded: “They’re taking a rate that is artificially too high and they’re trying to backfill in additional services to justify that rate, instead of just giving a refund to people that were overcharged.”
Last year, legislation from Petersen that was aimed at restoring rate reviews was killed by the same Senate committee.
“I’m sort of an inveterate optimist,” he said of his new attempt. Petersen hopes the SCC’s report in September — which said Dominion would have overearned by as much as nearly $426 million in 2016 but for expenses it listed for coal ash cleanup — sways lawmakers to return to the rate review system that was in place before 2015.
Stephen D. Haner, a veteran lobbyist who represented major industrial electric customers such as Huntington Ingalls for years but now works for the Virginia Poverty Law Center to advocate for low-income consumers, does not share that optimism.
“I don’t want to bury it until the shots are actually fired,” Haner said. “But the odds are Dominion will not want anyone else carrying a competing bill. … You can assume that any bill that is not brought by one of their friends, they will want out of the way.”
Petersen said Dominion had not approached him about signing on to its preferred legislation.
“I have not had one conversation with a Dominion representative about public policy in the last 14 months. … I know the lobbyists for Dominion, some of them are good friends of mine. They don’t come talk to me,” he said. “I don’t think they want regulatory review because that makes them less profitable.”
Haner predicted that Dominion’s bill will become a “fruitcake.”
“There are going to be environmental elements, there are going to be energy-efficiency elements,” Haner said. “They’ve been running around the Capitol looking for allies, and they’re asking allies what they need to join the team. … It’s nice to see them working so hard.”
In a significant shift for the historically business-oriented General Assembly, 13 House candidates who signed a pledge refusing utility campaign cash won seats — all Democrats and all but one newcomers. Another group of incumbent and first-time delegates supports another Petersen priority: banning campaign contributions from public service corporations.
Botkins, the Dominion spokesman, said: “It has been an honor and a privilege for the Dominion team to get to know all the newly elected members of the General Assembly to discuss the numerous shared interests of energy policy.”