Virginia Lawmakers Mull Over Measure to End Utility Rate Freeze If Clean Power Plan Is Snuffed

by | Jan 18, 2017

Facing a hostile GOP-controlled Congress – and with the inauguration of President-elect Donald Trump only days away – Virginia State Senator. J. Chapman Petersen (D-Fairfax City) has filed a bill (SB1095) that would protect state ratepayers, should the provisions of the Clean Power Plan be slashed by the new Administration, according to a January 11 report by the Richmond Times-Dispatch.

The measure would end the current halt on rate review and regulation, mandated by a measure (SB1349) signed by Virginia Governor Terry McAuliffe (D) in March 2015. That bill froze the utility’s base rates for five years and prevented the State Corporation Commission from conducting its biennial reviews until 2022.

Now, the legislation brought to the floor by Petersen would end that freeze “…on the earlier of December 31, 2017, or the date that the carbon emission guidelines for existing electric power generation facilities that the U.S. Environmental Protection Agency has issued pursuant to § 111(d) of the federal Clean Air Act are withdrawn, repealed, found by a non-appealable court decision to be invalid or unenforceable, or otherwise are legally barred from being implemented.”

Petersen originally had opposed the legislation by Sen. Frank W. Wagner (R-Virginia Beach), that created the rate freeze – and now has said that it is time to allow the SCC to resume business as usual, the local news outlet reported, given the wholesale change in Washington.

“We’re going to have a new EPA. We’re going to have a new Secretary of Energy. It’s going to be a new day. So, the whole political context for it has really been kicked into a bucket,” Petersen said.

In a status report to the General Assembly issued in September, the State Corporation Commission found that Dominion Virginia Power earned a combined return on equity, or profit margin, of 11 percent during the 2015 calendar year – exceeding the return most recently approved by the commission by about 1.4 percentage points, “or approximately $106.7 million in revenues.”

In orders issued by the commission on Dominion and Appalachian Power’s long-term plans, called Integrated Resource Plans, the commission noted that any anticipated costs arising from the Clean Power Plan would be recovered through “rate-adjustment clauses,” or riders – not base rates. For both utilities, the commission concluded that “the currently effective base-rate freeze is highly unlikely to protect Virginia ratepayers from the bulk of CPP compliance costs,” the Times-Dispatch reported.

“Dominion is a corporate citizen that does business and they do a great job supplying energy and they’re successful and they turn a profit. And we regulate that profit,” Petersen said.

The U.S. Supreme Court stayed the Clean Power Plan in February 2016 while courts reviewed it. In September, arguments were heard before the U.S. Court of Appeals for the District of Columbia Circuit. “The EPA believes the Clean Power Plan will be upheld when the merits are considered because the rule rests on strong scientific and legal foundations,” an EPA statement released January 11 said.

The plan still has the support of many legislators in the U.S. Congress – among them Senator Cory Book (D-NJ), who has said that the CPP “represents a major step forward in our national effort to reduce greenhouse gas emissions and fight climate change. …We must be aggressive in our pursuit of reducing our carbon footprint….Nothing less than the quality of the air our children will breathe, and the climate in which they will live, is at stake.”

Dominion spokesperson David Botkins told the newspaper by email that Dominion’s rates are lower now than they were when Wagner’s bill was passed in 2015.

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