Lawmaker wants electric rates reviewed in Virginia

January 13, 2017 GMT

RICHMOND, Va. (AP) — Virginian electric customers could be missing out on potential windfalls from Republican President-elect Donald Trump’s promises to remake federal energy and tax policies, according to a Democratic state senator.

But the chances of a GOP-controlled General Assembly fixing state law to help consumers, Sen. Chap Petersen said, are “about the same chance for me starting as quarterback for the Redskins next year.”

At issue is a two year old state law that prohibits the state from lowering or raising the utilities’ base rates — the majority of a customer’s bill — for several years.

Petersen said Trump’s victory means that law is no longer needed.

“We ought to go back to the system we had, which worked. If utilities have excessive profits, they ought to give refunds to their customers, period,” he said.


Spurred by concerns that President Barack Obama’s push to curb carbon emissions — called the Clean Power Plan — would cost electric customers billions of dollars and prematurely close coal-fired electric plants, Virginia lawmakers passed industry-authored legislation in 2015. It locked base rates in place for several years at the state’s two biggest utilities, Dominion Virginia Power and Appalachian Power.

Typically, governments allow electric monopolies like Dominion and Appalachian Power to set rates based on the cost of producing and providing electricity — including taxes and regulatory costs — plus a profit. In theory, any savings from federal policy or tax code would be passed on to customers.

Trump has promised to get rid of the Clean Power Plan and to lower corporate tax burdens, moves that could lower the cost of electricity production.

Petersen’s legislation would repeal the 2015 law if relevant sections of the Clean Power Plan are scrapped by the Trump administration.

“You really can’t say, ‘Oh we have a federal government that’s trying to put coal out of business, so we need to give power plants a financial break.’ Sorry, that narrative doesn’t work anymore,” Petersen said.

Under the 2015 Virginia law, utilities can still adjust rates for fuel costs and the costs of building new plants or refitting old ones. For example, Dominion is currently seeking legislation to clarify that it can recover $3.5 billion it plans to spend extending the life of its nuclear power plants in Virginia by 20 years to 25 years. That would add an average 30 to 45 cents per month to a typical residential bill during a 10-year construction period and then average about $3.25 per month afterwards, according to company spokesman David Botkins.

Proponents hailed the 2015 measure as a way to ensure constant electric prices for years, while critics called the legislation a massive giveaway to Dominion — the state’s most politically powerful corporation — that did nothing ultimately to shield customers from the Clean Power Plan’s potential costs.


A consultant hired by large industrial customers calculated that the 2015 Virginia law could cost customers $2.4 billion in unnecessary payments by Dominion customers between 2016 and 2022, and more than $300 million by Appalachian Power customers between 2016 and 2020. State regulatory officials have also said the cost to Dominion’s customers of the law could be well over a $1 billion more than they should have to pay.

But Thomas Wohlfarth, a senior vice president for the company, said those figures are based on overly optimistic projections about the true cost of providing electricity.

He said a freeze is still prudent given the uncertainty around what Trump and a new Congress might do on energy policy and taxes. Wohlfarth said Trump’s promised reduction of the corporate income tax from 35 percent to 15 percent could be offset by eliminating deductions in other areas and the incoming president can’t just do away with federal carbon regulations “with the stroke of a pen.”

“We’re not of the opinion that carbon regulation is going to go away,” he said.

Wohlfarth also said Trump’s proposed changes could take several years to implement and by then Dominion’s base rates could be subject to adjustment again. In 2022, the State Corporation Commission is set to review Dominion’s rates for the preceding two years and could adjust rates then.