by Madison Hirneisen
A Virginia House of Delegates panel advanced bipartisan legislation Thursday allowing a state agency to reduce utility rates when it determines utility providers are bringing in excess revenues, a move supporters say will help protect ratepayers from soaring energy bills.
A panel of lawmakers on the House Commerce and Energy Committee voted unanimously Thursday to advance a bipartisan proposal giving the State Corporation Commission authority to order reductions to utility base rates – meaning rates for generation and distribution services – “produce revenues in excess of the utility’s authorized rate of return.”
The bill’s author, Del. Lee Ware, R-Chesterfield, told the committee Thursday, the bill gives the SCC the ability to reduce base rates when it “deems appropriate to ensure the resulting rates are just and reasonable,” while also giving utilities the opportunity to recover costs and “earn a fair rate of return.”
Ware told lawmakers Thursday he believes the bill “may bring to a proper a multi-year effort to protect utility ratepayers by restoring full and unalloyed review authority to the State Corporation Commission.”
The bill was introduced earlier this month by a group of bipartisan lawmakers, who argued the measure was needed in order to undo previous decisions by the General Assembly that limited the SCC’s power to lower rates it finds are too high.
The bill comes after the state’s largest utility provider, Dominion Energy, was found by the SCC in 2021 to have overcharged its customers by over $1 billion since 2015. Dominion agreed to a $330 million settlement at the end of Nov. 2021, and the average customer is expected to be refunded $67 over two years.
Supporters of the measure argue it will protect ratepayers from being overcharged on their energy bills by returning authority to the SCC to have a say in rates.
The measure won support from Gov. Glenn Youngkin’s administration and the attorney general’s office, as well as groups including Americans for Prosperity and the Virginia Poverty Law Center. Travis Voyles, acting secretary of Natural and Historic Resources, told lawmakers Thursday Youngkin’s administration “strongly supports” the bill.
“Action is needed to address the high cost of living, out-migration and the ability to attract jobs here in Virginia,” Voyles said. “Much of this starts with planning ahead in a way that benefits all and ensures we have a regulatory framework in Virginia that allows for competitive energy rates. This bill, along with others, present straightforward, foundational and common sense ways to move the conversation on energy forward.”
The bill was advanced in a 21-0 vote and received broad bipartisan support – an indication it could have a smooth path forward in the politically-divided General Assembly.
In other committee action, lawmakers also approved a bill by Del. Tony Wilt, R-Rockingham, provides the SCC authority to determine whether utility costs are “best recovered through base rates or rate adjustment clauses,” according to the author. As previously reported by the Richmond Times-Dispatch, “rate adjustment clauses” or “riders” resulted in a 15% increase last year.
Supporters of Wilt’s measure said it would allow the SCC to protect consumers while ensuring utility companies are earning a fair rate of return.
Lawmakers on the committee also moved to advance House Bill 1770, a bill backed by Dominion Energy that received significant amendments since it was first introduced. In its original form, HB 1770 and its companion bill SB 1265 raised concern among a coalition of groups that it would interfere with procedures for setting rates that rests in the SCC’s authority.
The amended version of HB 1770 removes provisions that sought to change procedures for how rates are set and outlines a requirement for Dominion to undergo biannual rate reviews with the SCC. The bills author, Del. Terry Kilgore, R-Scott, told lawmakers the bill “provides the SCC with the authority [for] additional oversight over Dominion.”
The bill was also amended to require both Dominion and Appalachian Power Company to receive SCC approval before permanently retiring generation facilities. Opponents voiced concern that the amendment would interfere with the Virginia Clean Economy Act, which was passed by lawmakers in 2020 and set a timeline for when carbon-emitting power plants must be retired.
“The utilities are required to plan as if those facilities will retire, and they’ve got 25 years to figure out the best and least cost way to reliably transition away from fossil fuels – that’s how the Clean Economy Act works,” Will Cleveland, a senior attorney with the Southern Environmental Law Center, told The Center Square. “What this substitute says today is, rather than planning to retire, utilities should plan on not retiring unless they voluntarily decide they want to retire something.”
“That totally inverts the utility planning process, and in my mind, greatly impedes the purpose of the Clean Economy Act, which was to get us off of fossil fuel generation,” Cleveland said.
The bill was advanced by the committee in a 12-9 vote.
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Madison Hirneisen is a staff reporter covering Virginia and Maryland for The Center Square. Madison previously covered California for The Center Square out of Los Angeles, but recently relocated to the DC area. Her reporting has appeared in several community newspapers and The Washington Times.
Photo “Dominion Energy” by Tim Evanson. CC BY-SA 2.0.
